- Banks have refused to cooperate on Gulf and Government oil deal fearing loses
- Kenyans to brave as oil prices expected to be increased by September, 2023
- Dealers buying oil from Tanzania, exporting through Uganda to DRC, Rwanda and Burundi, completely avoiding Kenya
Kenyans will have to brace for tougher times ahead if the reports emanating over the suspicious bilateral trade agreement between Kenyan Government and Emirates National Oil Cooperation is anything to go by.
It has emerged that, Kenyan banks have now grown cold feet over the leaked deal after demand for petrol and diesel plummeted upon impact of new 16% Value Added Tax [VAT] at the pump.
Gulf suppliers State owned Saudi Aramco, Emirates national oil corporation (Enoc), and Abu Dhabi National Oil Corporation Global Trading Company (Adnoc) signed a nine month agreement for supply of petroleum to Kenya.
The companies were to ship in 800,000 tonnes of petroleum products every month.
However, details obtained by safinews.co.ke on Monday 10th July, from the oil players, has indicated that there is oversupply because the demand has fallen by almost half
This, has, been brought about by the Kenyans decline to use personal vehicles to working station due to high cost of fuel pump and instead carpooling as devised by the opposition leader Raila Odinga.
This, has made, local confirming banks to panic, because the petroleum oil products, will remain unsold for a much longer time, than they thought.
The banks are; Kenya Commercial Bank [KCB] National Commercial Bank of Africa [NCBA], Absa, Stanbic and Cooperative Bank [Co-op] listed under the deal
“The LC issuing bank is Afreximbank [by issuing the letter of credit said -LCs- local banks commit to pay suppliers in case offtakers Gulf energy, Oryx energies and Galana oil fail to pay for the fuel] secret internal memo read.
What is of more interesting revelations is that the local banks have refused to cooperate fearing loses that they would incur if they agree anything of government without devising their internal mechanisms
In order for Government of Kenya to control damage and counter the unnecessary embarrassment by hiking fuel in the next two months has been forced to send a delegation to UAE.
The delegation, is, lead by Energy and Petroleum Regulatory Authority [EPRA] Boss Daniel Kiptoo to the Middle East to convince banks there to step in and issue LCs. The energy CS is Davis Chirchir.
“Gulf suppliers are expecting their first installment payment of kshs 70 billion (500m US $) coming September,” leaked memo indicates.
However, oil prices have been falling and Kenya wants to change the agreement to benefit from lower prices even as the shilling plummets against the Dollar.
Local petrol station outlets also want EPRA to increase their kshs 4.14 margin saying that this margin is the same as, when petroleum products were selling below kshs 100, making their margins unsustainable and have threatened to close their businesses.
Additionally, the high fuel prices in Kenya have driven dealers to buy in Tanzania, exporting through Uganda to DRC, Rwanda and Burundi, completely avoiding Kenya leading to high unemployment along the supply chain in the sub sector.
Economists have now advised Kenyans to expect the shilling to take a huge hit in September, as the state hunts for dollars at a time of possible supply shortages, amid plenty (glut) if EPRA fails to add margins for petrol stations which will further push up prices of petrol and diesel.