Kenya faces Sh3.2 billion claim after abrupt Oryx Energies fuel deal exit

The Kenyan government is staring at a Sh3.2 billion compensation claim following the sudden termination of an emergency fuel import arrangement with Oryx Energies Kenya Ltd. The firm revealed that the deal was cancelled after it had already procured and dispatched cargo to Mombasa, leading to substantial financial exposure.

Appearing before the Senate Standing Committee on Energy on Wednesday, Oryx Energies Managing Director Angeline Maangi stated that the company acted upon a formal invitation from the Ministry of Energy and Petroleum. The ministry had requested the firm to secure fuel supplies under an urgent procurement framework to mitigate potential shortages.

However, the state reportedly pulled the plug on the agreement on March 31, 2026, at a time when the vessels were already en route. Maangi told lawmakers that a binding contractual arrangement had been established through official correspondence before the government’s sudden change of heart.

The company estimates its total losses at $25 million, which translates to approximately Sh3.2 billion. These costs include the procurement of the product, logistics, and shipping expenses incurred during the transit period. According to the firm, the cancellation was communicated too late to prevent the financial hit.

The Senate probe heard that the firm had moved to secure the supplies following instructions intended to diversify import sources during a period of market stress. The Ministry of Energy and Petroleum has recently faced intense scrutiny over its procurement decisions, particularly those made outside the existing Government-to-Government (G-to-G) framework.

Internal documents suggest that the National Security Advisory Committee had previously discussed strategies to ensure fuel security in light of global geopolitical tensions. Despite these high-level discussions, the execution of the Oryx deal has now landed the taxpayer in a precarious position regarding potential settlement costs.

Oryx Energies has rejected the cancellation, maintaining that the government must honor its contractual obligations. The firm emphasized that it has operated in Kenya for nearly four decades and relied on the good faith of the formal written invitation issued by the competent authorities.

The Energy Cabinet Secretary, Opiyo Wandayi, has previously defended the G-to-G framework, arguing it provides better value than separate emergency shipments. However, the emergence of this Sh3.2 billion claim complicates the ministry’s narrative regarding cost-saving measures in the petroleum sector.

Industry analysts warn that such abrupt contract terminations could damage the investment climate within Kenya’s infrastructure and energy sectors. If the government is forced to pay the claim, it would add to a growing list of expensive contractual disputes currently being investigated by parliamentary committees.

The Senate committee is expected to summon more officials from the Ministry of Energy and the Energy and Petroleum Regulatory Authority to explain why the order was issued and subsequently revoked after the supplier had already committed resources.

As the investigation continues, the focus remains on whether the procurement followed the Public Procurement and Asset Disposal Act. For now, the prospect of a multibillion-shilling payout looms over a ministry already grappling with high pump prices and questions over supply chain integrity.