Rwanda's new fuel supply agreements with Kenya and Tanzania could reduce pump prices by between 10 and 30 per cent over the next three years if fully implemented, according to a trade economist.

Fuel prices have risen sharply since the beginning of 2026 due to conflict in the Middle East and subsequent supply disruptions. Between March and June, the price of gasoline (petrol) rose by 47.7% to Rwf2,938 per litre, while diesel rose by 50.3% to Rwf2,927 per litre.​​​​​​​

John Bosco Kalisa, CEO of the East Africa Business and Investment Advisory Council, said the projected gains from the new deals would stem from bulk fuel procurement, the elimination of intermediaries and improved supply logistics, which together could lower the cost of importing petroleum products.

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Rwanda last week signed an agreement with Kenya to import refined petroleum products through a government-to-government arrangement from Oman while the Rwanda National Energy Company (RNEC) and Gulf Bulk Petroleum Tanzania Limited (GBP) signed an agreement to facilitate the importation and storage of bulk refined petroleum products through the Port of Tanga in Tanzania.

"If this agreement is implemented as it was signed, we are likely to save between 10 and 30 per cent of the pump price," Kalisa said in an interview with Royal FM.

"By next year, we are likely to see a 10 per cent reduction, followed by 20 per cent and then 30 per cent as implementation progresses."

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The agreements are part of Rwanda&039;s strategy to secure fuel supplies through direct partnerships with neighbouring countries, reducing reliance on intermediaries while shielding the economy from global market disruptions.

Kalisa argued that buying fuel in larger quantities gives governments stronger bargaining power, resulting in lower purchase prices than smaller, fragmented orders.

"When you are buying in large volumes, you are safeguarding the country from external shocks. Government is also eliminating middlemen, and when there are middlemen, costs are higher because each one adds a margin,” he said.

Beyond lower prices, Kalisa said the agreements could increase the country's fuel reserves by about 30 per cent.

He noted that Rwanda currently has petroleum storage capacity for about two months. Under the new arrangement, he said, the country could increase that buffer to six months, while Kenya's pipeline infrastructure would also provide storage for Rwanda's fuel for up to 90 days, helping cushion against supply disruptions.

"Greater fuel security is particularly important as petroleum products remain a critical input across transport, agriculture, manufacturing, construction and other sectors of the economy," he said.

"With recent geopolitical tensions in the Middle East disrupting global energy markets and pushing up fuel prices, the government's decision to secure fuel through direct government-to-government agreements is intended to strengthen supply security and reduce exposure to external shocks."

According to Kalisa, higher prices have pushed up production and transport costs, contributing to inflationary pressures that affect businesses and households alike.

"Petroleum products are used across all sectors of the economy. When prices increase, the impact is felt by households, businesses and the government. Stabilising fuel supply is therefore critical for economic growth,” he said.

Kalisa also argued that the government-to-government model could reduce delays associated with private procurement, improve the reliability of fuel imports and minimise additional costs such as storage charges and logistics bottlenecks.

Kalisa maintained that the new government-to-government fuel supply arrangement is intended to strengthen, rather than replace, the private sector.

He said the government's role is to secure fuel at more competitive prices and create a more efficient procurement system, while private companies continue handling the importation, distribution and sale of petroleum products.

"Kenya has agreed to store Rwanda's fuel for up to 90 days without storage charges, this will minimise costs associated with delays at ports and improve the reliability of fuel supplies. These efficiencies would ultimately benefit both importers and consumers,” he said.