Three state-owned Gulf firms that import fuel to Kenya on credit earned Sh1.5 trillion in two years to May as Kenya renewed the contract beyond the 2027 elections.
Saudi Aramco, Emirates National Oil Co and Abu Dhabi National Oil Co will continue to supply gasoline, diesel, kerosene and jet fuel under a 180-day credit plan until early 2028, the Ministry of Energy and Petroleum says.
The two-year extension agreed upon in December starts early next year once Kenya imports previously agreed shipments.
Volume uptake was hampered by neighbouring Uganda's decision to directly source its fuel products and exit the deal with the three oil giants.
Between April 2023 and May 2025, 158 cargo of petroleum products were shipped to Kenya under the government-to-government deal.
"The transaction has now been de-risked. Letters of Credit (LCs) valued at Sh1.49 trillion ($11.58 billion) have been issued and LCs worth Sh1.08 trillion ($8.38 billion) have been settled. No single LC has ever been defaulted," said Daniel Kiptoo, the Director General of the Energy and Petroleum Regulatory Authority (Epra).
"G-to-G arrangement has eliminated USD spot purchases by about 140 oil marketing companies (OMCs), which previously created speculative tendencies. USD purchases are now being progressively undertaken by only LC-issuing banks."
Kenya turned to the three oil companies for supply under a six-month credit period, backed by letters of credit from commercial banks.
The arrangement replaced an open-tendering system that required about $500 million (Sh64.6 billion) a month, which had to be paid five days after delivery.
Kenya's renewed contract to purchase fuel on credit from three state-owned Gulf firms will run beyond the 2027 elections as the shipment deal continues to feel the effects of Uganda's exit.
Trade between Kenya and the UAE has more than doubled over the past decade.
The UAE is the sixth-largest export market for Kenyan goods and its second-biggest source of imports.
Kenya renegotiated lower margins in the wake of a damning audit that revealed consumers paid billions of shillings in additional petroleum product costs under the government-to-government oil deal.
The extra costs are said to have prompted protests from Uganda, forcing the nation to quit the shipment deal that was designed to save local oil marketing companies the hassle of sourcing dollars for imports.
Freight and premium costs dropped 11 percent to $78 per metric tonne of diesel, seven percent to $84 for petrol and 13 percent to $97 for jet fuel.
"Last year in December, the Cabinet extended the government-to-government deal by two years. We went to Dubai and met the companies there for that extension but even as we extended by two years, we had not lifted the volumes from the previous years," said Joseph Otieno, Commissioner for Petroleum at the Ministry of Energy, in an interview with the Business Daily.
"It means that the lifting of the remnant volumes will spill over to the end of this year, and then you start accounting for the two-year extension. That takes you to roughly the end of 2027 or early 2028 thereabout."
Under the initial deal, Kenya had committed to import 8.56 million tonnes of diesel, 7.01 million tonnes of petrol and 2.9 million tonnes of jet fuel.
However, as of March 16 this year, Kenya had only lifted 6.23 million tonnes of diesel, 4.56 million tonnes of petrol and 1.98 million tonnes of jet fuel.
It marked the second time authorities are renewing the contract first drawn up in 2023 as part of a strategy to ease pressure on forex reserves and to support the shilling.
The extension marked a change of heart for Kenya, which pledged "to exit the oil import arrangement, as we are cognizant of the distortions it has created in the foreign exchange market," according to a Treasury letter to the International Monetary Fund published in November.
Dropping the plan may resuscitate pressure on forex requirements as Kenya will then have to meet maturing payments as well as spot purchases every month, State officials say.
Oil imports by Kenya are also exported to South Sudan, the Democratic Republic of Congo and Burundi.
Under the initial deal, the premium charged by oil importers was higher compared to the previous open-tendering system.
"The premium charged at $97.50, $114.25 and $118 for motor super petrol (super petrol) Jet A-1 and automotive gas oil (diesel) respectively, were higher than those charged under the previous OTS," the Auditor General said in a report.
"It was not clear why the premium was included in the framework agreement with the supplier, the basis for the premium set, and whether the input of the buyer was sought before the premium amount was set."
The three state-owned firms agreed to lower petroleum prices by up to 14 percent per tonne in the extended supply deal, signalling relief for consumers at the pump.
A litre of diesel currently retails at Sh164.86, while petrol sells for Sh174.63 in Nairobi, compared to Sh190.38 and Sh199.15, respectively in March last year.
The G-to-G fuel importation deal could be extended beyond 2028 as both the government and OMCs supported the arrangement.
"We have seen a scenario where the USD liquidity is improving. We will evaluate the arrangement alongside stakeholders if we need to return to the OTS going forward," said Joseph Wafula, Deputy Director for Petroleum Economic Analysis at the Ministry of Energy. Marketers echoed similar comments.
"The G-to-G was a master stroke; it just came to resolve that issue (dollar availability)," said Peter Murungi, managing director of Vivo Energy.
