Waziri Mayai Wa Maradhi
JF-Expert Member
- Jan 28, 2026
- 397
- 97
After rejecting terms that would have given Saudi Aramco the sole right to provide cooking gas to the nation, Kenya withdrew from a prospective LPG agreement with the company.
A program that was essential to the government's strategy to lower the price of domestic gas has been put on hold by the decision to shut off the Saudi state-backed oil company.
A KSh2.6 billion financing package linked to the distribution of about 8.4 million LPG cylinders and the construction of additional storage and processing facilities was part of the proposed agreement, which has been negotiated since 2024.
However, according to disclosures to parliamentarians, the investment came with stipulations that would have locked the nation onto a single supplier and was organised in many tranches.
“The intended Memorandum of Understanding was not executed as expected given that parties were not able to amicably agree on the terms. The US$20 million was coming with serious conditions, one of which was exclusive supply of LPGs, which we found untenable,” Energy Cabinet Secretary Opiyo Wandayi told a Senate committee.
The government is moving the program toward private-sector finance as Saudi support is no longer accessible. According to the government, as part of the implementation plan, it has already issued calls for proposals and selected four local companies to assist domestic cylinder manufacturing.
The agreement's fall apart also marks a significant shift in the government's plan for financing LPG infrastructure. In order to finance LPG import, storage, and distribution facilities, Parliament has approved raising the petroleum development charge from 40 cents per litre to KSh 5.40. This move is anticipated to raise billions of shillings.
A program that was essential to the government's strategy to lower the price of domestic gas has been put on hold by the decision to shut off the Saudi state-backed oil company.
A KSh2.6 billion financing package linked to the distribution of about 8.4 million LPG cylinders and the construction of additional storage and processing facilities was part of the proposed agreement, which has been negotiated since 2024.
However, according to disclosures to parliamentarians, the investment came with stipulations that would have locked the nation onto a single supplier and was organised in many tranches.
“The intended Memorandum of Understanding was not executed as expected given that parties were not able to amicably agree on the terms. The US$20 million was coming with serious conditions, one of which was exclusive supply of LPGs, which we found untenable,” Energy Cabinet Secretary Opiyo Wandayi told a Senate committee.
The government is moving the program toward private-sector finance as Saudi support is no longer accessible. According to the government, as part of the implementation plan, it has already issued calls for proposals and selected four local companies to assist domestic cylinder manufacturing.
The agreement's fall apart also marks a significant shift in the government's plan for financing LPG infrastructure. In order to finance LPG import, storage, and distribution facilities, Parliament has approved raising the petroleum development charge from 40 cents per litre to KSh 5.40. This move is anticipated to raise billions of shillings.
