Saturday, January 20, 2024 - Treasury Cabinet Secretary Njuguna Ndung'u has confirmed that Kenya plans to exit the government-to-government oil deal with select Saudi Arabia companies by December.
However, he refuted reports alleging that the
exit was occasioned by the frustrations witnessed in the foreign exchange
market, insisting that Kenya had planned to eventually end the deal once it
achieved its end goals.
In a statement, Ndung’u explained that the G2G
arrangement was implemented temporarily to stabilize the Kenyan
shilling amid the acute dollar shortage.
He noted that at the time of the deal's
conception, the monthly demand for US Dollars by the oil sector had put a
strain on the country's forex reserves and subsequently threatened the security
of the supply of petroleum.
Pressure was also exerted on other critical
sectors such as food and agriculture that heavily rely on imports.
Hence, the government's eventual exit from the
deal was part of a strategic plan to pave the way for the private sector
players to take a more prominent role.
Further, the Treasury CS disputed claims that
the oil deal was a 'failure' owing to the weakening of the shilling in the
market.
Ndung'u explained that the oil agreement faced
difficulties, including the rollover risk linked to private sector facilities
that were backing the arrangement.
He added that this was a predictable outcome
given the arrangement of the deal.
The CS credited the oil purchased on credit
for easing the pressure on the US dollar when the country was at risk
of an economic shutdown.
The Kenyan DAILY POST
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