Treasury Cabinet Secretary John Mbadi has delivered a stark warning to Kenyans and politicians calling for the scrapping of the government-to-government fuel import deal: abandon the arrangement now, and the Kenyan shilling could plunge from its current rate of around KSh129 to as low as KSh180 against the US dollar.
Speaking during a church service in Siaya County on Saturday, May 23, Mbadi mounted one of his most forceful defences yet of the controversial bilateral oil arrangement, which Kenya entered in April 2023 with state-owned petroleum giants in Saudi Arabia and the United Arab Emirates.
“If you don’t have a G-to-G arrangement where payment is deferred even by three months, there will be strain on our shilling because the demand for the dollar will be high,” Mbadi warned. “You will find the shilling moving from 129 or 130 to 160, even 180. And once the shilling weakens, fuel becomes more expensive than what we see today.”
The G-to-G deal allows Kenya to import fuel on credit, spreading dollar payments over time rather than flooding the market with hundreds of millions of dollars every month. Before the arrangement, local oil marketers were purchasing roughly $500 million per month on the open market to pay for immediate fuel shipments — a demand that routinely drained dollar reserves, stoked black market trading, and sent the shilling sliding.
Mbadi also pushed back hard against claims that Kenya’s fuel woes are a product of poor domestic policy. He pointed to the Middle East conflict as the root cause of a global supply chain disruption that has hit multiple countries.
“Many politicians have localised this thing as if it were a Kenyan problem alone. I want to tell you that the problem of fuel is not a Kenyan problem. This is a global problem,” he said. “The landing cost has increased by 80 per cent because the route the fuel is taking is now longer.”
The government, he revealed, has already spent more than KSh14 billion absorbing fuel costs on behalf of Kenyans — KSh6.2 billion in April and KSh7.7 billion in May — while also cutting VAT on fuel from 16% to 8%, a move he said has reduced pump prices by roughly KSh15 per litre.
Despite these figures, opposition leaders — including Rigathi Gachagua, Kalonzo Musyoka, Fred Matiang’i and Eugene Wamalwa — have pressed for the deal’s cancellation, citing concerns over transparency and alleged benefits to politically connected players. Mbadi rejected those claims, insisting the framework was built to protect supply security and shield the currency, not to serve political interests.
“So let people stop misleading others,” he said.
The warning lands at a politically sensitive moment, with fuel pricing, tax reform, and the cost of living all converging as flashpoints ahead of the 2027 election cycle. For ordinary Kenyans already stretched thin, the stakes in this debate could not be higher.
