Uganda’s Energy Minister is negotiating with Tanzania to shift all oil product imports to Dar es Salaam, potentially ceasing imports through Kenya’s Mombasa port.
Uganda has been dissatisfied with the longstanding system under which Ugandan fuel companies buy 90 percent of their supplies through affiliated firms in Kenya. President Yoweri Museveni has complained that this exposes his country to supply disruptions and high pump prices.
In response, Uganda announced in November that it would hand over exclusive rights for the supply of all petroleum products to a unit of global energy trader Vitol. Uganda imported $1.6 billion worth of petroleum products in 2022, mostly originating from the Gulf.
“You can’t sit there and be at the mercy of one person. So far, I have met the President of Tanzania. My president sent me as an envoy, and we are in discussions,” she said.
“So, we know that the alternative route could be expensive because of the logistics that are involved, but we also know that there is a possibility of a negotiation with the government of Tanzania to waive some taxes so that their sister country can be able to do business.”
According to the Daily Monitor, Ms. Nankabirwa said Kenya’s President William Ruto had on several occasions shown positivity towards Uganda’s move, “but I don’t know where all this frustration is coming from.”.
“The president sent me to meet President Ruto four times, and he was so supportive all the time. Then he sent me, my brother Chirchir [Davis], the Minister of Energy, and some [Kenyan] people to court. What do you do if you are sued? You wait for the ruling. So we have been talking and we are continuing to talk, but now we have a time frame because we feel the pump price in Uganda should be lower,” she said.
This decision, if it stands, threatens Kenya’s investment of $385 million in Kipevu Oil Terminal 2 (KOT2) in Mombasa, which was opened last year, and a $170 million fuel jetty in Kisumu.
