Kenyan officials from the Treasury and Ministry of Energy are trying to renegotiate agreements signed in March with the UAE and Saudi Arabia for petroleum supplies on credit, local media reported, citing government sources.
The move comes less than three months before Kenya's first installment of $500 million out of $3 billion accumulated over the past six months.
The government sent a delegation comprising officials from the Energy and Petroleum Regulatory Authority (EPRA), National Treasury, and Ministry of Energy that has been in the UAE for the past week negotiating changes to some clauses of the deal.
In accordance with the agreement, Kenya is expected to pay about $500 million at the end of September as the first installment of the amount owed to companies that have supplied petroleum products to the country on credit in recent months.
The deal involved state-owned companies such as Saudi Aramco, Emirates National Oil Corporation (ENOC), and the Abu Dhabi National Oil Corporation Global Trading Company (ADNOC). It provided for the nation to switch to a longer payment period from settlement on delivery and remove the need for importers to pay hundreds of millions of dollars monthly.
It was expected that the agreement would strengthen the shilling against the dollar; however, the national currency has continued to weaken.
In particular, the agreement fixed the commercial terms of the partnership. As the supply volumes were fixed, the country couldn't negotiate cheaper fuel, while the drop in local demand resulted in an oversaturation of the market.
At the same time, companies that export fuel to nations, such as Uganda, Burundi, Rwanda, and the DRC recently preferred to buy fuel products in Tanzania and transport them to other landlocked countries through Uganda.