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Kenya extends oil supply contract with three Gulf companies

Published

1 year ago

September 19, 2023

Kenya’s energy regulator says it has extended an oil supply deal with three Gulf-based companies designed to manage demand for dollars.

The agreement, which replaced an open tender system in which local businesses sought to import oil each month, was inked with Saudi Aramco, Abu Dhabi National Oil Company (ADNOC.UL), and Emirates National Oil Company in March.

According to the head of the Energy and Petroleum Regulatory Authority (EPRA), Daniel Kiptoo, “There was an extension up to December 2024 so this is basically arising out of negotiations that have been happening to drive down the freight and the premium (costs).”

He defended the contract by saying that it had reduced the price of shipping oil to Kenya and the premium it paid to suppliers.

A senior foreign exchange trader at a commercial bank said, “It is still not lost on us that it is a stop-gap measure, whichever way you look at it.”

Also, it offers 180-day credit terms, allowing the nation to accumulate funds over time rather than needing to pay for imports with roughly $500 million per month.

There are recent concerns regarding the oil import agreement. It has come under scrutiny from government critics who argue that it has contributed to the surge in retail prices of petrol. Currently, a litre of petrol is selling for 211 shillings ($1.43), a significant increase from 160 shillings a year ago. Additionally, the government doubled the tax on fuel in July, further exacerbating the situation.

Although the rate of decline has eased recently, the Kenyan shilling has continued to face constant pressure from the dollar, confounding President William Ruto’s April forecast that it would strengthen noticeably.

Officials from the government and lawmakers from the ruling party have defended the president from the criticism by claiming that the nation was helpless against the rising oil costs on the world market.

VenturesNow

IMF mission concludes 4th loan program assessment in Egypt

Published

2 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.