Kenya has signed a memorandum of understanding (MoU) with Saudi Aramco, a Saudi Arabian Oil Company, to help import refined petroleum products at lower prices than the global rates amid high gas prices.
The National Oil Corporation of Kenya (NOCK) announced the news. Many towns in Kenya have been hit hard by an unprecedented fuel shortage, which has led to an increase in fuel prices across the country.
In the latest push by the government to lower gas prices, NOCK will start shipping fuel from Saudi Arabia at lower prices. Through a government-to-government deal, Saudi Aramco will supply NOCK with refined fuel at ‘exclusively’ lower prices. According to NOCK CEO Leparan ole Morintat, the agreement with Saudi Aramco will guarantee a regular supply of petroleum products to Kenya. NOCK will import 30 per cent of the country’s monthly petroleum requirements to tackle the ongoing crisis.
Reportedly, Saudi Aramco will provide the petroleum products for vehicles and power plants with an extended credit period, while NOCK will pay within 60 and 90 days. In the next phase, both companies will negotiate the contract terms.
NOCK CEO said, “The plan is to start trials in August for two months and see the impact of the exclusive prices that Saudi Aramco will be giving us.”
Fuel crisis in Kenya
The ongoing fuel crisis in Kenya has affected the country. Kenya, like most of its East African neighbours, depends on imported refined petroleum products from the Middle East countries. Oil marketing firms in Kenya have also experienced stockouts due to a mismatch between demand and supply.
The ongoing crisis is threatening to grind Kenya’s economy to a halt. Kenyans are also grappling with rising inflation as prices of basic commodities have also increased significantly in recent months.