Cooking Gas Prices Could Stay High in Kenya After Ksh 2.5B Saudi Deal Fails
2 min read
Kenyans may continue paying high prices for cooking gas after the government rejected a Ksh 2.5 billion deal with a Saudi company.
Energy Cabinet Secretary Opiyo Wandayi told the Senate Energy Committee that Kenya walked away from the agreement with Saudi Aramco because the terms were not favourable.
According to Wandayi, the deal had strict conditions that would have given the Saudi firm full control over the supply of cooking gas (LPG) in Kenya.
He explained that the government could not accept such conditions, as they would limit competition and affect the local market.
“We were not able to agree on the terms. The deal came with serious conditions, including giving one company exclusive rights to supply LPG, which we rejected,” Wandayi said.
What the Deal all about
The Ksh 2.5 billion financing was part of a Saudi-backed programme aimed at making cooking gas more affordable in Kenya.
The plan included:
- Supplying about 8.4 million gas cylinders
- Expanding gas import and storage facilities
- Improving distribution across the country
However, with the deal now cancelled, these plans have been delayed.
Impact on Kenyans
The collapse of the agreement means Kenyans may have to wait longer for cheaper cooking gas.
This comes despite earlier promises by the Kenya Kwanza government to lower gas prices and make it more accessible to households.
Gas Storage
Since 2024, Kenya has been in talks with Saudi Arabia to set up a floating gas storage facility near the Port of Mombasa.
The facility was expected to:
- Store up to 30,000 tonnes of LPG
- Act as a temporary solution before building a permanent storage terminal
With the deal falling through, the future of this project is now unclear.
Government Turns to Local Investors
Wandayi said the government will now work with private companies to develop the gas sector.
He revealed that:
- Requests for proposals have already been issued
- Four local companies have been identified to help manufacture gas cylinders
The government hopes this approach will still improve supply and reduce costs in the long run.
Despite the setback, Wandayi assured Kenyans that there is enough fuel in the country.
“We have enough petroleum products to last until April, and we have agreements with international suppliers to maintain steady supply,” he said.
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