Kenya officially permits Uganda’s state oil company, landlocked, to import petroleum products through the port of Mombasa, resolving a longstanding dispute between the neighbouring countries, as confirmed by Uganda’s Ministry of Energy.
Uganda has been actively exploring alternative avenues for importing petroleum products. This includes considering the option of using a Tanzanian port as an alternative to the longstanding practice of relying on affiliated Kenyan firms for oil deliveries.
According to Solomon Muyita, spokesperson for Uganda’s Ministry of Energy and Minerals, the implementation of this new arrangement is expected to commence with the first shipment scheduled for May 2024.
“Kenya has agreed to give us a licence; UNOC (Uganda National Oil Company) is now free to import through Mombasa,” Mr. Muyita said.
According to a report by The Business Daily newspaper, Kenyan Energy Minister Davis Chirchir was cited as affirming that UNOC (Uganda’s National Oil Company) would utilise the Kenya Pipeline Company for transporting petroleum products. This implies that Kenya would continue to derive benefits from the arrangement, as stated in the report.
In 2022, Uganda’s importation of petroleum products amounted to $1.6 billion, with the majority sourced from the Gulf region. Notably, about 90% of these products are currently imported through Kenya.
In November, Uganda disclosed its intention to grant exclusive rights to supply all petroleum products to a division of the multinational energy trader Vitol. Under this arrangement, Vitol would subsequently supply UNOC.
The decision to engage Vitol was prompted by concerns regarding the reliance on Kenyan firms for oil imports. The Ugandan government highlighted that this dependence had occasionally led to supply vulnerabilities. Specifically, Ugandan retail companies found themselves in a secondary position during supply disruptions, impacting retail prices adversely.
In November, Uganda made public its intention to grant exclusive rights for the supply of all petroleum products to a division of the global energy trader Vitol. Under this arrangement, Vitol would then supply UNOC.
The decision to engage Vitol stemmed from concerns raised regarding the utilisation of Kenyan firms for oil imports. According to the government, relying on these firms had occasionally exposed Uganda to supply vulnerabilities. During times of supply disruptions affecting retail prices, Ugandan retail companies found themselves in a secondary position, prompting the government to seek alternatives.
In the previous month, Kenyan President William Ruto and Ugandan President Yoweri Museveni met in Uganda and reached an agreement to resolve the ongoing dispute between their countries.
