First Petroleum Consignment Arrives in Mombasa

The government has put adequate measures to ensure continued supply of petroleum products in the country.

Deputy President Rigathi Gachagua said the measures are under government to government arrangement.

He defended the arrangement saying the petroleum [importation] regulation of 2023 provides that the importation of super petrol, diesel and jet A-I into the country shall be taken either through an open tender system [OST] or a government to government arrangement.

“The arrival of the first consignment of petroleum products at the port of Mombasa under the arrangement through the programs is an important milestone in the country,” he pointed out.

Gachagua pointed out the petroleum imports are paid for in United States Dollars (USD), which has of late strained the country’s foreign exchange reserves.

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He made the remarks during the receiving of maiden petroleum imports under the government to government arrangement at newly completed Kipevu oil terminal [KOT] at the port of Mombasa in Mombasa County.

The Deputy President pointed out there has been a deficiency in USD liquidity, resulting in a rapid depreciation of the Kenya Shilling (KES).

Rigathi, who was accompanied by Petroleum Cabinet Secretary Davis Chirchir, Kenya Ports Authority [KPA] chairman Benjamin Tayari and KPA Managing Director Captain William Ruto, added the KES-USD exchange rate is a critical variable in the determination of petroleum pump prices.

He added any KES depreciation is directly transferred to the consumer, hence increased retail prices.

“In an effort to ease the aforementioned pressure, the Government has, therefore, entered into a Memorandum of Understanding (MoU) with prospective Governments,” he said.

The DP said there are signed Master Framework Agreements with the respective petroleum trading entities for the supply of petroleum products on a two hundred and seventy (270) days term on an extended credit period of one hundred and eighty (180) days.

Rigathi revealed that through the arrangement the country is set to realise greater macroeconomic benefits.

He disclosed that there will be an accumulation of additional foreign reserves of approximately US$ 3 billion in the next six months as demand for foreign exchange eases from the oil sector.

“Sustained build-up of foreign exchange reserves arising from the deferred payments for fuel imports for six months will significantly improve the country’s foreign reserve levels,” he said.

In his welcome remarks Chirchir told the forum the ceremony marks the launch the receiving of petroleum products on government to government framework.

He pointed out the arrival of the products is an eye opener after oil markets had sought government intervention after Kenya Kwanza administration came to power.

“The oil markets had been soliciting for dollars to be able to pay for the products due to unavailability of dollars after the product docked in the county,” he pointed out