EDITORIAL | Kenya’s G-to-G oil deal smells increasingly like a sovereign transfer of wealth to private firms

The Kenyan public was promised stability. What it may have received instead is one of the most opaque and politically loaded commercial arrangements in recent memory.

When Nairobi unveiled its Government-to-Government (G-to-G) oil import deal with Saudi Arabia and the United Arab Emirates, officials framed it as an emergency sovereign intervention; a strategic mechanism to ease pressure on foreign exchange reserves, lower fuel costs and shield households from global energy shocks. It was marketed not merely as a trade arrangement, but as an act of economic statecraft.

Yet two years on, the numbers tell a different story. Kenyan motorists are paying some of the highest pump prices in East Africa. Diesel, the fuel that powers transport, agriculture and industry; has, astonishingly, retailed above petrol. That alone should have triggered national outrage and parliamentary alarm.

Instead, the country has been treated to a haze of official explanations, technical jargon and political defensiveness while fundamental questions remain unanswered.

At the heart of the controversy lies a simple issue: who actually benefited from this sovereign arrangement?

Government-to-Government agreements are not ordinary commercial contracts. They exist precisely because states occasionally decide that strategic national interests are too important to be left entirely to market forces or private intermediaries. Oil, food security, defence procurement and critical infrastructure often fall into that category.

In such arrangements, sovereign governments typically negotiate directly with one another, while state-owned entities execute the commercial side to ensure that any strategic or financial advantage ultimately accrues to the public.

That is how such deals work in China, India, Egypt and much of the Gulf. Sovereign privilege is not supposed to become private arbitrage. Kenya, however, appears to have inverted that logic.

The most troubling feature of the deal is the six-month credit window reportedly extended under the arrangement. In practice, this meant fuel cargoes could enter the Kenyan market immediately, be sold for cash locally, and only be paid for six months later.

That is not a minor technicality. It is an extraordinary financial privilege.

Whoever controlled the fuel sales during that six-month period effectively enjoyed access to billions of shillings in rolling liquidity; money that could earn interest, finance other commercial activities or generate significant financial returns long before suppliers were paid.

Under a genuinely sovereign arrangement, such gains should have accrued to the Kenyan State through the National Oil Corporation of Kenya (NOCK). Instead, private oil marketers appear to have occupied the commanding heights of the transaction.

This raises an uncomfortable but unavoidable question: was the G-to-G deal designed to protect the Kenyan economy, or to create a low-risk cash machine for a politically connected commercial elite?

The distinction matters enormously.

If the Kenyan State assumed the diplomatic and sovereign obligations underpinning the arrangement while private firms captured the commercial upside, then public risk was effectively socialised while profits were privatised. That would represent not merely poor governance, but a profound distortion of public policy.

The role of NOCK is especially difficult to understand.

Why establish a state oil corporation at all if it is sidelined whenever strategic commercial opportunities arise? If NOCK was reduced to a ceremonial intermediary while private companies retained the lucrative components of the transaction, then the very rationale for maintaining a national oil corporation begins to collapse.

Then Trade CS Moses Kuria with Saudi Minister for Commerce and Media Majid Al Quassabi in Saudi Arabia’s capital Riyadh. The Government-to-Government (G-to-G) oil import deal with Saudi Arabia and the United Arab Emirates was signed under his watch. PHOTO/UGC.

Equally troubling is the opacity surrounding the deal.

Kenyans still do not know the full contractual structure of the arrangement. Parliament has not provided comprehensive disclosure on the selection of participating oil firms. There is little public clarity on whether Treasury earned any direct return from the deferred payment mechanism. Nor is there transparency on how much financial benefit may have been generated during the six-month payment cycle.

This silence is politically corrosive.

No democratic government can reasonably expect citizens to accept sovereign obligations negotiated in secrecy while a small network of commercial actors appears to enjoy the benefits. The larger and more strategic the transaction, the greater the burden of transparency.

The timing could hardly be worse. The geo-political instability surrounding the Strait of Hormuz; through which Gulf oil shipments pass, has exposed the fragility of Kenya’s dependency on the current arrangement. If regional tensions linked to the US-Israel confrontation with Iran threaten supply chains, then the government must explain why the country remains locked into the structure without exploring broader sourcing alternatives.

The public also deserves answers over reports of fuel imports with sulphur levels allegedly far above acceptable environmental standards. Kenyans are being asked to pay premium prices for fuel whose quality itself is now under scrutiny.

The defence that “global oil prices are rising everywhere” no longer suffices. Kenya’s circumstances are unique because Kenya uniquely adopted this G-to-G framework. That inevitably invites scrutiny over whether the arrangement itself has become part of the problem rather than the solution.

The Auditor-General has already raised concerns. That should have been the beginning of a much deeper institutional response.

The National Assembly’s Public Accounts Committee, the Senate oversight committees, the Ethics and Anti-Corruption Commission and the Commission on Administrative Justice all have a duty to investigate whether sovereign commercial advantages were improperly diverted into private hands.

The Law Society of Kenya, too, cannot remain silent. Contracts executed in the name of the Republic are not private instruments shielded from public examination. If the architecture of this deal undermined the principles of sovereign accountability, then the legal fraternity has an obligation to say so clearly.

Ultimately, this controversy goes beyond fuel.

It is about the growing tendency within the Kenyan state to blur the line between public interest and private enrichment. It is about whether sovereign agreements are negotiated for national economic security or structured to reward well-connected intermediaries.

And it is about whether taxpayers are expected to absorb the political risks of statecraft while a narrow commercial class enjoys the rewards.

A genuine Government-to-Government arrangement should place citizens at the centre of the transaction. If public resources, sovereign guarantees and diplomatic leverage are deployed, then public benefit must be measurable, visible and transparent.

Anything less ceases to be statecraft. It begins to look like extraction.