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Kenyan oil marketers move to block state's import deal with UAE

March 15, 2023

Kenyan oil marketers have moved to court seeking to stop the planned importation of fuel on credit from the United Arab Emirates (UAE) in a government-to-government deal that officials have said will ease pressure on dollar demand.

The dealers, through lawyer Ndegwa Njiru, say the plan by the government to pick a local oil marketer breaches the Open Tender System where marketers competitively bid for the tender.

The oil firms also allege that there was no public participation and stakeholder consultation before the gazettement of the Petroleum (Importation) Regulations, 2022, which is a breach of the constitution.

“The 1st respondent, the country’s Energy and Petroleum Cabinet Secretary Davies Chirchir, has un-procedurally published legal notice no 3 of 2023, the Petroleum (Importation) Regulations, 2022, and gazette notice no 15803 of 23rd December.” Njiru said.

The imports, which will come through a credit of six months and a year, are expected to ease a crisis in the foreign exchange market given that oil shipments account for 28 percent of Kenya’s monthly imports.

“The tender documents and tender agreement dated March 1, 2023 anchored therein have sought to exclude any other marketing company from participating in the bidding process thus violating Article 227 of the Kenyan constitution,” the dealers say in the petition filed on Wednesday last week.

Deal terms

Under the deal, the local firm nominated by the ministry will import fuel and other marketers forced to buy for the local market and transit to neighbouring countries.

Sources familiar with the matter say Abu Dhabi National Oil Company (Adnoc) — the state-owned oil company of the UAE — will be supplying the fuel

State officials have been guarded on how the shipment will affect fuel prices in Kenya amid concerns that the longer credit line could wipe out the benefits of buying diesel and petrol in large quantities.

Pump prices have remained unchanged since November, with a litre of super petrol retailing at KSh177.30 ($1.37) in Nairobi and diesel at KSh162 ($1.25) per litre, up from KSh106.99 ($0.82) and KSh96.40 ($0.74) respectively in February 2021.