The government asserts that because marketers are still clearing old dollar-priced stocks held within the oil pipeline, the effects of the government-to-government trade in petroleum products have not yet been felt in the foreign exchange market.
Petroleum that is constantly present in the pipeline is known as line fill. Players who have been granted permission to bring oil into the nation are required to maintain a million litre supply on hand at all times.
On April 13, the first delivery under the government-to-government deal with 165,000 metric tons of gasoline arrived in Mombasa.
“The first cargo that has arrived on the government-to-government deal and should be off-taken on the shilling is yet to hit the market because of the line fill,” said Energy and Petroleum Cabinet Secretary Davis Chirchir at a meeting convened by the Petroleum Institute of East Africa in Nairobi.
The credit-based deal, which was announced on March 13 between Saudi Aramco and the Abu Dhabi National Oil Company (Adnoc), is anticipated to extend until mid-September.
Since oil shipments account for up to $500 million in monthly imports into Kenya, or 28% of total imports, the import agreement was implemented to address a foreign exchange issue.
After oil marketing companies start accepting commodities priced in shillings within the next week, the Ministry of Energy predicts that this disparity will decrease even more.
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