Nairobi — Kenya has settled Sh35.32 billion in credit fuel that was signed early this year under the government-to-government (G-to-G) deal with Saudi Arabia and the United Arab Emirates (UAE).

Treasury Cabinet Secretary Njuguna Ndung'u said yesterday evening that the state has already paid three Letters of Credits (LCs) totaling Sh35.32 billion ($238.84 million) before maturity.

Since the importation of Jet A1/Dual Purpose Kerosene and the transit portion of super petrol and diesel imports are settled in the American dollar (USD), Ndung'u stressed that this has helped stabilize the local currency against the greenback.

It added that the Kenya Shillings that paid for the local portion of super petrol and diesel imports are credited to a separate escrow account and later converted into USD as each individual LC maturity date nears.

Currently, the USD escrow account holds $1 billion (Sh147.9 billion), while the Kenya Shillings escrow account holds Sh115 billion, ensuring timely and seamless payment of all maturing LCs, Treasury stated.

On March 10, 2023, the Government of Kenya entered into Master Framework Agreements (MFAs) with Aramco Trading Fujairah FZE (Aramco), Abu Dhabi National Oil Company (ADNOC), Global Trading Ltd., and Emirates National Oil Company (Singapore) Private Limited (ENOC) for the supply of petroleum products under a G-to-G arrangement.

"The G-to-G arrangement has eliminated spot purchases for the USD by about 100 Oil Marketing Companies which previously created speculative pressure in the spot market," Ndung'u said.

"The G-to-G does not therefore in any way expose the country to exchange rate volatility or depreciation, but rather protects the economy from such negative effects."