Energy Cabinet Secretary Opiyo Wandayi has revealed that the cheap gas deal between Kenya and Saudi Arabian oil giant Aramco collapsed.
Appearing before the Senate Energy Committee on Tuesday, March 31, CS Wandayi said the negotiations between the Kenyan government and Aramco failed to yield an agreement, stalling plans to expand the country’s liquefied petroleum gas (LPG) infrastructure.
CS Wandayi noted that a planned Memorandum of Understanding (MoU) with Aramco Trading Fujairah FZE was never signed due to disagreements over key terms.
“The intended Memorandum of Understanding was not executed as expected, given that parties were not able to amicably agree on the terms,” Wandayi stated.
According to the Energy CS, the proposed Ksh2.5 billion ($20 million) financing package came with stringent conditions, including demands for exclusive LPG supply rights, which the government rejected.
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“The so-called $20 million was coming with serious conditionalities, one of which was exclusive supply of LPGs, which we found untenable. In any event, these funds were not coming in one tranche but in multiple tranches, which did not make sense to us,” Wandayi told the senators.
The Energy CS said the government opted to abandon the deal in favour of more viable alternatives, while assuring lawmakers of continued cooperation with the committee.
“We are available to supply supplementary materials and data to the committee,” Wandayi added.
He mentioned that the government is now shifting focus to private sector participation to salvage its ambitious LPG expansion programme.
“The Ministry is further exploring the possibility of engaging private sector participants to get funding for the programme,” he said.
The collapse of the Aramco deal is a blow to President William Ruto’s plan to make clean cooking energy more affordable and accessible.
Kenya has been in talks with Saudi Arabia since 2024 to secure a floating LPG storage and processing facility to be stationed off the port of Port of Mombasa.
The proposed facility was expected to handle up to 30,000 tonnes of LPG and serve as a temporary storage and bottling plant as the country develops a permanent onshore facility.
The project was central to the government’s broader strategy to increase supply, stabilise prices, and fulfil a 2023 pledge to cut the cost of a 6kg gas cylinder significantly.
On May 2, 2023, President Ruto announced that the deal would have reduced the cost of refilling a six-kilogram gas cylinder to Ksh300.
“Today, you are buying a gas cylinder for between Ksh2,000 and Ksh2,800. We have decided that the government will step in to reduce the cost of gas. That cylinder you are buying at Ksh2,800, we will bring it down to Ksh500 or even Ksh300,” President Ruto announced.
The Head of State also warned business individuals who are involved in illegal gas filling that their days are numbered.
“I want to tell all the characters who are involved in the illegal filling of gas cylinders that are posing a threat to the use of gas cylinders that your days are numbered,” Ruto added.
