Govt To End G2G Oil Deal With Saudi Arabia Companies In December

The government of Kenya intends to end the government-to-government deal it signed with Saudi Arabia oil companies in December 2024 after the National Treasury indicated that the deal failed to stabilise the Kenyan currency, which has been losing out against the dollar.

The G2G deal which was launched by President Ruto in April 2023 was billed as Kenya’s solution to stabilise the shilling against the dollar.

The deal agreed between Kenya and three national oil exporters from the Gulf, provides for six-month credit for oil imports, backed by letters of credit issued by participating commercial banks.

Kenya admits that the deal soured immediately saying that there was low demand which saw the import volumes dip.

The G2G deal replaced the open tendering system that allowed oil marketers to be paid upon five days of delivery. This created unnecessary pressure on the foreign exchange market.

The move by the government to abandon the deal comes after months spent by President Ruto defending the deal as claims regarding graft in the G2G deal surfaced.