The government has come out strongly to defend the Government-to-Government (G-to-G) fuel import arrangement, insisting the model remains critical in stabilizing fuel supply and shielding the economy from global market shocks.
Government Spokesperson Isaac Mwaura said the framework was introduced in 2022 at a time when Kenya was grappling with fuel shortages, rising pump prices, and limited access to foreign currency.
Addressing past fuel crises
According to Mwaura, the previous reliance on spot market purchases exposed the country to manipulation by market players, leading to artificial shortages and pressure on the US dollar.
“The system was vulnerable to manipulation, resulting in supply disruptions and increased demand for foreign exchange,” he said.
He explained that the G-to-G model eliminated middlemen by allowing Kenya to import fuel directly from global suppliers such as Saudi Aramco, ADNOC, and ENOC.
Bringing stability and predictability
Mwaura noted that the arrangement has introduced predictability in pricing and supply planning.
“This direct procurement model allows us to negotiate prices in advance and plan shipments efficiently,” he said.
He added that the system has ensured consistent fuel availability over the past three years, effectively ending the shortages that previously plagued the market.
Impact on the economy
The government argues that the G-to-G deal has also helped stabilize the Kenyan shilling by reducing speculative demand for dollars.
According to Mwaura, this has contributed to lower inflation and improved foreign exchange reserves.
He dismissed criticism of the programme, saying claims that it has not benefited Kenyans are misleading.
Responding to concerns and controversies
Addressing concerns surrounding the controversial MV Paloma shipment, Mwaura termed it an isolated case.
He said the cargo was excluded from fuel pricing calculations to protect consumers from higher costs, adding that most imports under the arrangement have been secured at favorable rates.
Measures to cushion consumers
Amid rising global fuel prices, the government says it has implemented several interventions to ease the burden on consumers.
Mwaura revealed that authorities stepped in to prevent diesel prices from exceeding KSh 230 per litre by deploying a KSh 6.2 billion stabilization fund through the Petroleum Development Levy.
In addition, the government temporarily reduced Value Added Tax (VAT) on petroleum products from 16 percent to 8 percent to lower pump prices.
Fuel subsidies also remain in place to cushion households and businesses, even as levies continue to support infrastructure projects such as road construction.
Why the G-to-G model still matters
Despite ongoing debate over fuel prices, the government maintains that the G-to-G framework offers a more stable and reliable system compared to previous models.
Officials say that while global oil prices remain volatile, the focus remains on ensuring steady supply while minimizing the impact on consumers.
