Kenya reviewing bids for oil supply on long-term credit
Kenya is reviewing bids from major international oil suppliers that will see the country enter into long-term credit agreements for the supply of the commodity as policymakers scout for avenues of easing pressure on dollar demand.
Energy and Petroleum Regulatory Authority director general Daniel Kiptoo said the bids for a government-to-government supply contract were opened yesterday and the government is reviewing them. Kenya is targeting Gulf-based oil majors such as UAE’s ADNOC and Saudi Aramco.
With mounting pressure in the dollar market to meet huge requirements for fuel imports, President William Ruto’s government has pinned hope on a 180-day credit system that will see suppliers paid every six months. The winner of the contract will supply oil for a period of nine months.
“By doing that we alleviate the pressure by removing a third of the demand for dollars in the market,” Mr Kiptoo said, referring to oil importers accounting for one-third of monthly demand for the dollar.
Analysts, however, have faulted the move saying it amounts to just postponing demand for the dollar, a foreign exchange trader with a leading commercial bank in Nairobi told Reuters.
The previous system was open to all oil marketing companies in the country, with the winner importing enough cargo to supply the industry for two months and paying it in hard currency within a week of delivery.
