The Treasury has already paid Ksh35.2 billion ($238.8 million) as part of its obligations to the government-to-government deal agreed between Kenya and Gulf countries.
Documents shared by the Treasury show that the payment is part of the first maturing Letters of Credit (LCs) of the deal agreed between the Kenyan government and a couple of Gulf oil companies including; Saudi Aramco, Emirates National Oil Corporation (Enoc), and Abu Dhabi National Oil Corporation Global Trading (Adnoc).
The documents also show the hard escrow account is holding Ksh146.7 billion ($1 billion).
Meanwhile, the denominated escrow account is holding Ksh115 billion which is being held up until the fuel supply process is completed.
Treasury CS Njuguna Ndung’u chairs a bilateral cooperation meeting Czech Republic and Kenya at the Treasury Building, Nairobi county on Wednesday, January 11, 2023.
‘’So far, these are the earliest maturing LCs under the G-to-G arrangement,’’ the Treasury stated.
Treasury said that the LCs, with a combined value of USD 238,842,710.12, have already been settled (prepaid before maturity) without distorting the forex market.
The payment is part of a fuel deal that was signed between the Kenyan government and three Gulf companies in March.
The deal payment was delayed until September to allow traders and importers to work around foreign exchange pressure.
Saudi Aramco of Saudi Arabia, Emirates National Oil Company Group (ENOC) of Dubai, and the Abu Dhabi National Oil Company (ADNOC) will be receiving payment in the oil deal.
When the deal was struck, President Ruto promised that the move would help the government explore options that would ease pressure on the Kenyan shilling.
“Fuel marketers and all the people in that space will be able to buy fuel products in Kenya shillings and it will remove the pressure on our dollars. In fact, in the next month or so, the dollar will come down in a phenomenal way. In my estimation, the exchange rate will come down to 120,” President Ruto promised in April.
The oil deal will see the companies supply diesel, super petrol, and jet fuel on credit to Kenya.
The Kenyan government extended its oil deal with with the governments of Saudi Arabia and the United Arab Emirates for another 12 months with the initial deal set to expire in December.
President William Ruto at the launch of Dhow CSD at Central Bank Building.