Nairobi — Azimio La Umoja One Kenya Leader Raila Odinga has demanded the cancellation of the government-to-government deal claiming it's a scam that has created a breeding ground for corruption in the country.
In his dossier on the government-to-government deal on oil importation which was entered in March this year, Odinga said other than keeping the cost of oil permanently high in Kenya, the deal was costing the country trade in petroleum with neighboring landlocked countries.
"There was no G-to-G. Kenya did not sign any contract with Saudi Arabia or the UAE. Only the Ministry of Energy and Petroleum signed a deal with state-owned petroleum companies in the Middle East. Why Ruto chose to characterize the deal as a G-to-G is the first red flag that points to mischief in this deal," he said.
He alleged that the government-to-government deal was not aimed at supplying oil on favorable terms but was a business deal to shield the three Kenyan companies from paying 30 percent corporate tax.
"Shielding the companies the three companies from this tax is the reason Ruto told Kenyans that it was G-to-G. Your guess is as good as mine on who is pocketing the unpaid corporate tax. But the burden of the unpaid corporate tax is passed to Kenyans at the pump," Odinga said.
President William Ruto's government opted for government-to-government oil supply contracts in March this year after the shilling tumbled to record lows.
The government ditched the Open Tender System (OTS) that has been in use for importing fuel for nearly a decade in favour of direct procurement under a government-to-government deal with Saudi Arabia and the United Arab Emirates.
In the G-to-G deal, the three Gulf State-owned firms Saudi Aramco, Abu Dhabi Oil Company (ADNOC), and Emirates National Oil Company (Enoc) were given leeway to handpick local oil marketing companies which would distribute fuel on their behalf.
Odinga is pushing for the country to revert to the Open Tender System which he says ensured a guaranteed supply of petroleum product saying the G to G business model is hurting the consumers through exorbitant prices passed on the consumers.
"Some of the companies charging the higher prices deliver more cargo than they were contracted to deliver, forcing Kenyans to buy more of the oil whose prices are inflated, hence the permanent high prices of petroleum products," he noted.
The Opposition Leader is calling on the Ethics and Anti-Corruption Commission needs to reign in on the matter and conduct investigation on the oil marketing companies engaged in the deal.
Odinga is demanding for the Memorandum of Understanding between Kenya and Saudi Arabia and the United Arab Emirates been made public as well as the Supplier Purchase Agreement it signed with the oil companies.
"Nobody knows how Gulf Energy, Galana Oil Kenya Ltd and Oryx Energies Kenya Limited got nominated to handle local logistics. But the hand-picked distributors are selling oil to us at almost twice the price from bulk suppliers,"he said.
"The Supplier Purchase Agreement between the Middle East Oil firms and their hand-picked distributors in Kenya has never been seen. We challenge Ruto to publish this document,"Odinga added.
The Azimio Leader expressed that the scrupulous deal has led to the neigbouring Uganda to opt out of the deal to import to petroleum products through the Kenyan port because middlemen have inflated prices by up to 59 per cent, imposing too high a cost on consumers.
He explained the freight and premium rates for May 2023 cargoes were higher in the Northern Corridor by 61 per cent compared to the Central Corridor which exposes the consumers to higher prices.
"The middle men president Museveni is talking about are Kenya government officials. That is what has pushed Uganda and other forward markets like South Sudan, East DRC, Rwanda and Burundi to consider importing goods through the Central Corridor or Tanzania route. Uganda is shifting to the central corridor,"Odinga noted.
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President Yoweri Museveni said Uganda has now contracted bulk suppliers and refineries to service its requirements, adding that his country has discussed the decision with both Kenya and Tanzania.
Museveni said a refinery scheduled to be built in Uganda would be a game-changer in petroleum pricing in the region.
The move by Uganda deals a heavy blow to Kenya's OMCs which have been supplying 90 percent to Uganda through their associates there.
Gulf, Oryx, and Galana were the local oil marketing companies that were handpicked to distribute the fuel products to other oil companies for the duration of the deal.
The firms have been earning billions of shillings in revenue from transiting fuel to Uganda, which will not only affect local jobs but also reduce tax revenue collection.
