The Kenyan government says is set to exit its Government to Government (G2G) deal that it launched in April 2023.
The G2G oil supply deal agreed between Kenya and three national oil exporters from the Gulf was launched by Kenya’s president William Ruto last spring in a bid to stop the free fall of the Kenyan Shilling against foreign currencies.
In a report by the International Monetary Fund (IMF), the Treasury said that the scheme has not worked as it hoped.
“The government intends to exit the oil import arrangement, as we are cognizant of the distortions it has created in the FX market, the accompanying increase in rollover risk of the private sector financing facilities supporting it and remain committed to private market solutions in the energy market,” the Treasury is quoted as saying.
The deal marked a switch from an open tender system in which local companies bid to import oil each month.
It was initially for nine months but was extended for another 12 months to December 2024, after which it will now be withdrawn.
Since the scheme’s launch, the shilling has depreciated by over 20 percent against the US dollar, surpassing the historical low mark of 160 to the dollar.
