Kenya’s treasury has admitted to the G-G oil deal failure that Kenya signed with three Gulf State-owned companies has hit a dead end and the government is working on an exit plan.
According to the disclosures to the International Monetary Fund (IMF), the deal that was supposed to mitigate forex challenges by selling oil to Kenya in local currency instead of dollars has failed to materialise.
Reports from IMF indicate that the oild deal created tension and concerns in the forex markets distortions and increased rollover risks of private sector financing the deal.
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“Govt intends to exit [G2G deal], as we are cognizant of distortions it has created in the FX market, the accompanying increase in rollover risk of private sector financing facilities supporting it & remain committed to private market solutions in energy market”
The shilling has depreciated 20% against US dollar since April when the deal was introduced hitting a new low of Ksh. 160 against the dollar, with no indication of rising anytime soon.
Therefore, the Kenyan government intends to exit the deal by December after the G-G oil deal failure. The move has now exposed the kenyan government after top government officials claimed that the G-G oil deal was the solution to fuel woes in the country.
However, the opposition had warned the government of this deal terming it as one sided and that it will not solve the fuel crisis in the country, sentiments that President William Ruto denied and told them to take the back seat.
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With the continuous depreciation of the shilling against the dollar and the G-G oil deal failure, it remains unclear how the government will respond to tackle fuel crisis in the country and lack of dollars in the kenyan market.