Kenya seeks to delay petroleum imports payment to ease foreign exchange pressure

Roving Correspondent for Tv47 Digital February 27, 2023, 01:46 PM

Kenya petrol imports — Customers at a fuel station. Kenya is seeking a year-long payment period for petroleum products imports, rather than settling on delivery. PHOTO/REUTERS

In Summary

When products arrive in Mombasa today, the country pays about $500 million within three days, says Energy CS Davis Chirchir.

The pressure has been compounded by the sliding of the Kenyan shilling against the US dollar.

Kenya is seeking a year-long payment period for petroleum products imports, rather than settling on delivery, to relieve pressure on its foreign exchange rate, Energy Cabinet Secretary Davis Chirchir says.

"When products arrive in Mombasa (port) today, we pay about $500 million within three days. That causes significant pressure," Chirchir said on Monday.

Shilling Slides

The Kenya Shilling has continued to slide against the dollar, thus increasing prices of imported goods. At the same time, Kenyan exports are 'cheaper' in the other markets. On Monday Feb. 27, Central Bank of Kenya rates put the shilling at KSh126.6 buying and KSh126.7 selling against the U.S dollar.

Energy CS Davis Chirchir: "It's causing pressure." PHOTO | FILE

The Central Bank of Kenya (CBK) says as the shilling continues to depreciate, wealthy Kenyans are accumulating dollars to preserve the value of their bank deposits.

Accumulated Dollars

As at November 2022, almost a trillion Kenya shillings (KSh922 billion) had been accumulated in dollars, an increase of 14.8% compared to KSh803.66 billion the previous year.

Fuel is retailing at KSh177.30 a litre in Nairobi (petrol) and KSh162 for diesel. The monthly review by the Energy and Petroleum Regulatory Authority remained unchanged despite the sliding local currency.