Museveni terms Kenya's G2G oil importation deal a middle scheme that swindled Uganda

The controversial Kenya and Gulf countries government-to-government (G-to-G) fuel importation agreement that President William Ruto described last year as the best deal for the country has returned to haunt his administration after Ugandan President Yoweri Museveni described the arrangement as a “monumental scam” that ripped off Ugandan taxpayers.

What Ruto hailed as akili tupu (pure brainpower) and an innovative masterclass strategy to save the country’s economy is now at the centre of diplomatic and political controversy following Museveni’s remarks that the arrangement was effectively a government-to-middlemen scheme that swindled taxpayers.

Speaking on Thursday during the groundbreaking ceremony for a 320-million-litre petroleum storage terminal in Mpigi District, Uganda, Museveni said the revelation prompted him to question Ugandan officials responsible for petroleum procurement and later seek alternative ways of sourcing fuel directly from bulk suppliers.

“No, it was not a government-to-government agreement. It was government to middlemen,” said President Museveni, while correcting a statement made by a senior official at a public function attended by hundreds of Ugandans.

Opposition leaders, led by the late Raila Odinga, protested against the deal when Ruto unveiled it, calling for greater transparency, but their concerns were dismissed. Three local companies were subsequently selected to import the fuel, with the government saying they had been chosen by Gulf oil-producing countries to ship petroleum products to Kenya.

What was presented as a solution to the country’s fuel importation challenges has now become a source of diplomatic and political controversy between Kenya and Uganda, one of Kenya’s biggest trading partners, following Museveni’s remarks that his country had been procuring fuel through intermediaries under a model presented as G-to-G.

Museveni, who is also the chairperson of the East African Community (EAC) Summit of Heads of State, said a Kenyan senator informed him that the model his administration was engaged in with the Kenyan administration was a scam.

He also disclosed that Uganda had saved billions of shillings after withdrawing from the arrangement.

“The Republic of Uganda was buying petroleum products through middlemen in Kenya. Can you imagine that? And the person who woke me up first was a senator from Kenya who informed me how the middlemen in Kenya were cheating us. That's how eventually we linked up with people or the bulk suppliers...What we had was government to middle men and not government to government,” Museveni said.

According to figures presented during the ceremony, Uganda was paying a premium of $118 per metric tonne for diesel under the previous arrangement, compared with $83 under its current arrangement with Vitol and Uganda National Oil Company (UNOC).

For petrol, the premium fell from $97.50 to $61.50 per metric tonne, while that of aviation fuel fell from $114.25 to $79.25, according to figures cited by Museveni and Uganda’s Permanent Secretary for Energy Irene Batebe.

Museveni said the cost differences convinced him that the arrangement had to end. “So that's when I had to come in and say, this must end. And it ended,” he said.

Uganda subsequently moved to give UNOC a greater role in directly importing petroleum products.

In 2024, Uganda sought to reduce its reliance on Kenyan oil marketing companies and allow UNOC to directly import fuel through Kenya. The move initially triggered a dispute over licensing and access to Kenya’s petroleum infrastructure.

Kenya and Uganda later reached an agreement allowing UNOC to import petroleum products through Kenya and use the country’s infrastructure. The arrangement involved the Port of Mombasa and the Kenya Pipeline network.

Kenya’s G-to-G framework, introduced in 2023, was designed to secure petroleum supplies through government-owned suppliers in the Gulf, with Ruto marketing it as a pure economic strategy specifically designed to reduce pressure on the immediate demand for US dollars, stabilise the Kenyan shilling and eliminate artificial fuel shortages.

Ruto has repeatedly defended the G-to-G framework, maintaining that it has guaranteed uninterrupted fuel supplies across the country while helping to stabilise pump prices and ease pressure on the Kenya shilling, despite volatility in the global energy market.

“Through the government-to-government fuel supply framework, we have secured guaranteed fuel supplies despite global supply chain disruptions, ensuring uninterrupted fuel availability across the country,” Ruto said in May this year.

He noted that before the arrangement was introduced, oil importers were forced to compete for United States dollars within short timelines under the spot-market system, placing intense pressure on the local currency.

According to the President, the previous system contributed to the rapid depreciation of the Kenya shilling and exposed the country to recurring fuel supply uncertainties whenever international prices surged.

“The arrangement has stabilized fuel pricing compared to the old spot market system, where prices fluctuate sharply every month,” he said.

The President added that the framework had enabled Kenya to access fuel on more flexible payment terms, reducing pressure on the country’s dollar reserves.

“The G-to-G arrangement has guaranteed supply even when we have disruptions and has made it possible for us to pay on terms that do not put pressure on our dollar reserves,” Ruto said.

Despite Ruto’s past defence of the arrangement, he has remained silent on Museveni’s latest remarks, and senior government officials had yet to respond at the time of publication.

Opposition leaders, including former ODM leader the late Raila Odinga, former Deputy President Rigathi Gachagua and Wiper leader Kalonzo Musyoka, have opposed the framework, questioning the lack of direct state-to-state agreements and describing the arrangement as a scam.

Two years ago, Raila highlighted what he described as discrepancies, failures and corruption associated with the oil deal and called for its immediate cancellation.

“Five facts are undeniable, there was no G-to-G. Kenya did not sign any contract with Saudi Arabia or the United Arabs Emirates (UAE). Only the Ministry of Energy and Petroleum signed a deal with state-owned petroleum companies in the Middle East. Why Ruto chose to characterize the deal as a G-to-G is the first red flag that points to mischief in this deal,” said Raila.

He claimed the deal had failed to live up to its promises on multiple fronts. Despite Ruto’s assurances of reduced fuel costs, Raila argued that the price of the commodity had risen significantly.

Kalonzo has also consistently opposed the framework, describing it as a scandal in the making and saying it “serves private interests”, while demanding the resignation and prosecution of the Energy Cabinet Secretary and all those he accused of being complicit in the “scandal”.

Yesterday, Gachagua welcomed Museveni’s remarks, saying the Ugandan President had vindicated his earlier criticism of the framework, which he claimed was a strategy by Ruto to advance business interests.

“It was a big scheme for William Ruto to take over the marketing of petroleum products in Kenya. It's a very lucrative trade because it's in the billions of dollars. He went to the Middle East and identified three companies and made a deal with them and then looked for a proxy that trades on the fuel business on his behalf,” he said.

“I’m happy that President Musevani has realized that Uganda has been conned by William Ruto. I think he just fell short of naming his Kenyan counterpart. I think he was just being decent because of diplomatic relations between the two countries. Ruto has actually made money from Uganda. The guy is not just stealing from Kenyans. He has now even gone to the neighboring country,” he added.

Kiharu MP Ndindi Nyoro has also criticised the fuel importation framework, alleging a lack of transparency. He insisted that fuel prices must be reviewed immediately, warning that delays would continue to strain the economy.

“The arrangement is a scam and a profit machine for leaders. They must explain to Kenyans why they are profiting while Kenyans are bearing the pain,” he said.