Kenya’s President William Ruto announced progress in resolving the fuel supply standoff between Kenya and Uganda after meeting with President Yoweri Museveni.
Kenya and Uganda had been in disagreement after Kenya refused to grant a license to Uganda’s government-owned oil company to operate locally and handle fuel imports to Kampala.
Nairobi declined the use of Kenya Pipeline Company (KPC) infrastructure to transport refined petroleum products to Uganda from the Mombasa port.
This led to Uganda filing a lawsuit against Kenya at the East African Court of Justice, accusing Kenya of denying Uganda National Oil Company (UNOC) rights to operate as an Oil Marketing Company (OMC) in Kenya.
President Ruto expressed optimism about resolving the issues, stating, “I am glad that the issues affecting the flow of petroleum products between Kenya and Uganda are being resolved.”
I am glad that the issues affecting the flow of petroleum products between Kenya and Uganda are being resolved.
We have agreed on a way forward of sourcing and scheduling imports for the region in a manner that will ensure we achieve the most competitive pricing and maximum… pic.twitter.com/ZWhIsRTcmP
— William Samoei Ruto, PhD (@WilliamsRuto) February 26, 2024
He further mentioned, “In my meeting with President @KagutaMuseveni today, we also discussed the need for the two countries to urgently pursue the design and construction of the earlier conceptualized Eldoret-Kampala-Kigali refined petroleum product pipeline.”
Kenya has traditionally supplied crude oil to its East African neighbors, with Uganda importing most of its refined petroleum products through the Mombasa port via KPC.
Kenya insisted that UNOC register as an oil marketer with Kenya’s Energy and Petroleum Regulatory Authority (EPRA) to import and export petroleum products through Kenya’s pipeline, citing various requirements including business registration certificates, tax compliance, and financial capability.
UNOC argued that as a state-owned company, it should be exempt from these requirements as it only sought to transport products through Kenya, not engage in business there.
As the dispute continued, Uganda signed a five-year contract with an Arab company to directly source fuel.
It also explored using the Port of Dar es Salaam in Tanzania for fuel imports.
Kenyan oil dealers expressed concerns, fearing losses if Uganda diverts its oil imports through Tanzania.
Martin Chomba, chairman of the Petroleum Outlets Association of Kenya (POAK), emphasized the potential impact on local oil companies.
“If Uganda indeed moves to the Tanzania route, a lot of local oil companies will suffer because they will lose their biggest market,” Chomba stated.
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