Parliament questions effectiveness G-to-G fuel deal as payments hit Sh1.4 trillion

Energy ministry officials were on Tuesday at pains in explaining the major increase in fuel prices despite having renewed the Government-to-Government fuel deal aimed at cushioning Kenyans from price volatility.

Energy and Petroleum Cabinet Secretary Opiyo Wandayi failed to convince MPs on why Kenyans continue to face high fuel prices despite the ongoing Government-to-Government (G-to-G) oil import deal meant tact as a cushion.

Appearing before the National Assembly’s Energy Committee,  Wandayi was pressed to account for the disconnect between the objectives of the G-to-G arrangement and the persistent spike in pump prices.

The committee chairperson, Tom Odege, who is the Nyatike MP, expressed disappointment that despite the touted benefits of lower landing costs negotiated with international oil firms, the expected relief for consumers has not materialised.

“Kenyans are watching you today. Your technical team can cite freight and premium figures, but what people care about is why prices remain high. We expect you to defend their interests,” said Odege.

The Energy and Petroleum Regulatory Authority announced sharp increases in fuel prices in its latest monthly review, citing higher international landing costs of petroleum products and exchange rate pressures.

According to EPRA’s statement released Monday, the maximum pump prices for the period running from July 15 to August 14, 2025, have risen by an average of Sh9 per litre across the board.

However, Wandayi attributed the recent hike in pump prices to a 6–9 per cent increase in international oil prices between May and June 2025. These price changes, he said, translated to an increase of Sh5.10 per litre for petrol, Sh5.90 for diesel, and Sh5.74 for kerosene.

The G-to-G importation framework—implemented in March 2023—was designed to ease pressure on foreign exchange reserves and stabilise fuel supply.

The agreement allows for the importation of petroleum, diesel, and jet fuel under a deferred payment plan of 180 days, coordinated centrally by the ministry.

Data by the ministry of energy shows that from 2023 to June 2025, 170 cargo have been delivered with the government receiving $12.34 billion (Sh1.6 trillion) worth of petroleum products delivered under the G-to-G arrangement.

Further letters of credit valued at $10.9 billion (Sh1.41 trillion) have already been settled.

Wandayi attempted to justify the deal by pointing an accusing finger to Members of parliament for enacting many taxes that have hiked the cost of fuel.

“So, it is not this parliament that determines the price of food, there are so many things we can get into because there are issues of taxes, which country versus which country, which country taxes its citizens more. So, we need to really get the time and I don't want to go into those because I have so many points,” said Wandayi.

The CS compared Kenya’s fuel landing costs with neighboring Tanzania, citing data from July indicating that Kenya achieved lower freight and premium charges—$84 per metric tonne (Sh10,899) for diesel $78 (Sh10,121) for petrol and $97 (Sh12,587) for Jet fuel against Tanzania’s diesel, $135 (Sh17,518) and $190 for jetfuel.

However, MPs quickly pointed out that cheaper landing costs had not translated to lower pump prices in the past months.

“To further clarify, I did not in any way imply that Parliaments or the National Assembly, for that matter, plays a role in fixing petroleum product prices. No. But I did say that those taxes and levies that are imposed on petroleum products have to be approved by Parliaments,” said Wandayi.

The committee raised concerns about the border counties, whose residents were now crossing into neighbouring countries to buy cheaper fuel.

“You know, what the Kenyans will take from you today is about the price of oil as compared to our neighbours. And your reasoning might not convince Kenyans, because you know, we expect you to defend the interests of Kenyans.”

“You cannot convince my constituents to fuel in Kenya when it’s cheaper across the border. Your argument isn’t convincing,” said the committee chair.

Wandayi clarified that while Parliament does not set prices directly, it approves the tax and levy structures imposed on petroleum products. These, he argued, contribute significantly to the final cost at the pump.

“It is not Parliament that fixes fuel prices, and we’ve never been involved in pricing discussions. The Energy Committee should be part of such decisions since we represent the people,” said the committee deputy chair and Member of Parliament, Embakasi South Julius Mawathe.

The members noted that the Ministry had not shown empathy in addressing public concerns over the rising prices, especially at a time when global oil prices had dropped between June and July.

“Globally, fuel prices went down—but not in Kenya. That’s why Kenyans are angry,” charged Mawadhe. “It’s not just about price but also how the Ministry has communicated—or failed to communicate—with the public.”