Government Spokesperson Isaac Mwaura, on Thursday, came to the defense of the Government-to-Government (G2G) fuel procurement arrangement, asserting that it has brought stability to Kenya’s energy supply chain.
In a press briefing addressing recent developments in the country’s petroleum supplies and prices, Mwaura emphasized that the G2G framework has successfully ensured uninterrupted petroleum supply for the past three years.
He praised the initiative for significantly eliminating recurrent shortages and reducing volatility associated with the previous open tender system.
“The artificial shortages and spot buying that previously were common due to the open tender system, which also caused dollar hoarding, have been addressed, improving dollar availability for imports in general,” Mwaura stated.
He dismissed criticisms of the G2G arrangement as politically motivated, arguing that detractors overlook the structural improvements in supply security and currency stability.
In addition to stability, Mwaura noted that the arrangement has enhanced macroeconomic conditions and reduced historical market distortions.
He maintained that the G2G strategy has improved foreign exchange liquidity by curbing speculative dollar demand that was previously linked to spot buying and supply uncertainties.
“Following a G2G fuel arrangement, the Kenya shilling strengthened significantly against US dollar, ranking among the world’s strongest currencies, second only to Argentina. Inflation fell from 9.6% in 2022 to 2.7%, now 5.3%, while the currency trades steadily between 129 and 130 per dollar,” he said.
In his address, the spokesperson outlined targeted interventions aimed at cushioning households and businesses from global oil price shocks. He cited the Ksh. 6.2 billion fuel stabilization fund, financed through the Petroleum Development Levy (PDL), aimed at offsetting landed costs and smoothing retail price fluctuations.
Mwaura also highlighted recent tax measures, including a temporary reduction of Value Added Tax (VAT) on petroleum products from 16% to 8%, which has resulted in lower pump prices for both petrol and diesel. He said additional subsidies of approximately Ksh. 4.92 per litre as part of ongoing efforts to moderate retail price increases.
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