Page 11 - DMEA Week 11 2023

DMEA COMPANIES DMEA

ADNOC, Aramco and ENOC win tenders

to supply petroleum products in Kenya

KENYA KENYA has taken a drastic move to address a companies (OMCs) necessitated the Kenyan
worsening foreign exchange reserve crisis after government to take the drastic intervention
nationalising fuel imports, a development that of nationalising imports in order to secure an
is expected to ease demand for US dollars and extended credit period in settling oil imports
shore up reserves. payments.
The East African nation announced the oper- Before the move, Kenya was spending
ationalisation of a government-to-government $500mn monthly to pay for petroleum imports
fuel importation plan after awarding Saudi Ara- through the open tender system (OTS), some-
mco, Emirates National Oil Company (ENOC) thing that has contributed to a significant plunge
and Abu Dhabi National Oil Company (Adnoc) of reserves below the statutory requirement of
contracts to supply petroleum products over the four months of import cover.
next six months. The government however contends that it has
Saudi Aramco will supply the country with not abolished the OTS considering that in the
diesel while Adnoc and ENOC will supply super new Petroleum Importation Regulations, pro-
petrol and kerosene respectively. curing petroleum products through a govern-
The three companies were selected out of ment-to-government arrangement is deemed to
seven that had presented bids in a tender floated have occurred through the OTS.
two weeks ago. The measure to arrest a further drop in
The first cargo of fuel from the arrangement reserves comes when Kenya’s trade balance has
is expected to arrive next month and will be used been widening with the monthly average deficit
in the April-May pricing cycle. Kenya sets the expanding from $984.3mn in 2019 to $1.19bn
pricing of retail fuel prices in the middle of every last year.
month. Fuel has been a key contributor to the widen-
“The proposed transaction is expected to alle- ing deficit considering that in 2022 the average
viate the demand for US dollars driven by petro- monthly import bill on petroleum products was
leum imports by extending the time required to $476.3mn compared to $269.5mn in 2019.
source for dollar liquidity from the current five This means that fuel is a major component
days to 180 days,” said Davis Chirchir, Energy of Kenya’s total import bill having increased
Cabinet Secretary. from an average of 18.3% in 2019 to 26.1% last
He added that the heavy demand for the year thus putting significant pressure on dollar
greenback that was coming from oil marketing demand.™

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