A longstanding disagreement between Kenya and Uganda concerning oil imports has finally been resolved. This positive development paves the way for a smoother flow of petroleum products into landlocked Uganda.
Uganda Gains Direct Import Rights
Uganda’s Ministry of Energy and Minerals confirmed on Thursday, March 28, 2024, that Kenya has agreed to grant a license to the Uganda National Oil Company (UNOC). This license allows UNOC to directly import petroleum products through the Kenyan port of Mombasa, ending a months-long dispute between the two East African neighbors.
Previously, Ugandan oil retailers received their fuel shipments through affiliated firms in Kenya. Seeking alternative import routes, Uganda explored using Tanzania’s ports. However, the new agreement allows Uganda to leverage Kenya’s established infrastructure while gaining greater control over its fuel imports.
“The first shipment under the new system is expected to arrive in May,” said Solomon Muyita, spokesperson for Uganda’s energy ministry. “Kenya has agreed to grant a license, and UNOC is now free to import through Mombasa.”
Mombasa Remains a Key Import Hub
The Business Daily, a Kenyan newspaper, first reported the news. They quoted Kenya’s Energy Minister, Davis Chirchir, who explained that UNOC would utilize the Kenya Pipeline Company for transporting the imported fuel. This ensures that Kenya will continue to benefit from the import arrangement.
Statistics reveal that Uganda imported a significant amount of petroleum products in 2022, valued at $1.6 billion. The majority of these imports originated from the Gulf region, with roughly 90% channeled through Kenya.
Shifting Strategies and Renewed Cooperation
In November 2023, Uganda announced plans to grant exclusive rights for supplying all petroleum products to a subsidiary of the global energy trading company Vitol. Vitol, in turn, would supply UNOC. Ugandan authorities expressed concerns that relying on Kenyan firms for oil imports exposed them to “occasional supply vulnerabilities.” This meant Ugandan retail companies faced disadvantages during supply disruptions, impacting fuel prices.
Kenyan media outlets reported that Kenyan President William Ruto and his Ugandan counterpart, Yoweri Museveni, held a meeting in Uganda last month. This high-level dialogue is believed to have played a crucial role in resolving the oil import dispute.
A Brighter Future for East African Cooperation
The resolution of this disagreement signifies a positive step towards stronger economic cooperation within East Africa. It allows Uganda to diversify its import routes and potentially secure more competitive fuel pricing. Additionally, Kenya retains a central role in the regional fuel trade.
This development fosters a more stable and predictable environment for fuel supplies in Uganda, potentially benefiting consumers and businesses alike. The renewed cooperation between Kenya and Uganda sets a positive precedent for future collaboration on regional infrastructure and economic integration efforts.
Source: Reuters
