Kenya is steadily cementing its position as a regional energy hub, following the renewal of a government-to-government (G-to-G) oil importation deal with three Gulf-based firms. 

The extension, which allows Kenya to continue importing petroleum products on a 180-day credit basis, comes as the country expands its fuel exports to multiple landlocked neighbours, including the Democratic Republic of Congo (DRC), Rwanda, South Sudan, and Burundi.

Energy and Petroleum Regulatory Authority (EPRA) Director General, Daniel Kiptoo, revealed that the renewed agreement will be activated later in the year after the completion of pending oil consignments under the previous deal. He attributed delays in delivery to Uganda’s recent decision to bypass Kenya and source fuel directly, a move that disrupted regional fuel logistics.

Despite this, Kiptoo emphasized that the G-to-G framework continues to provide Kenya with strategic advantages, particularly in cushioning the economy from external shocks and stabilizing the local currency.

“The plan has helped stabilize the currency. It also gives us security of supply, even in the event of supply shocks,” Kiptoo said, noting that the shilling has appreciated by 17 percent since the deal’s inception in April 2023, now trading at an average of Ksh129 against the US dollar.

The deal also brings cost relief, with freight and premium charges dropping significantly diesel by 11 percent, gasoline by 7 percent, and jet fuel by 13 percent based on S&P Global Platts benchmarks.

Kiptoo highlighted that local oil importers have particularly benefited from the deal, as it has eased pressure on Kenya’s foreign currency reserves by reducing the need for immediate dollar-based transactions.

Initially implemented to stabilize domestic fuel supply and the macroeconomic environment, the G-to-G deal is now in its second renewal. Kenya’s continued reliance on this model signals a shift from the former open tender system, where oil importation was handled monthly by bidding companies.

As other nations express interest in replicating Kenya’s approach, the country is poised to gain greater influence in shaping regional energy policy and trade routes.