The agreement was meant to ease pressure on the forex demand and help prop the battered shilling by delaying payments for six months besides allowing local firms to pay the three fuel importers in shillings.

“The suppliers were willing to bring down the premiums to allow us to get competitive. We were fairly successful in pushing for the reduction of the freight and premium and we will see improvement going forward,” Mr Chirchir told the Parliamentary Committee on Energy on Tuesday.

Global crude prices have been on a sustained fall from April and hit $75 per barrel this month, but Kenya has missed out on the benefits of the drop due to the fixed contract signed under the deal to import fuel on credit.

Mr Chirchir did not disclose whether the new premiums will be reflected in the new prices that will be announced this Friday.

The deal has, however, failed to stop the slide of the shilling against the dollar. The shilling was exchanging at 141.2 units to the dollaron Tuesday, compared to 133.39 units in April when the first cargoes of the credit fuel arrived in the country.

Mr Chirchir led a delegation in last week’s visit to Dubai, as the government sought to soften repayment terms of the credit fuel, barely two months to the first payment.

Source: Business Daily