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Kenya lobbies Uganda to stick with Mombasa for oil imports
Fuel trucks transport petroleum from Malaba border. Kenya declined a request to have Unoc register as an oil marketing company locally in order to use Kenya Pipeline Company (KPC)’s network for handling and transporting fuel headed to Uganda. PHOTO/ MICHAEL KAKUMIRIZI
What you need to know:
Kenya declined a request to have Unoc register as an oil marketing company locally in order to use Kenya Pipeline Company (KPC)’s network for handling and transporting fuel headed to Uganda.
Kenya is lobbying Uganda to continue using the port of Mombasa to import fuel when the neighbouring country starts direct purchases of petroleum products this month.
Uganda’s Ministry of Energy and Mineral Development confirmed that high-level talks between the two countries took place in November amid mounting fears that Kampala will drop the port of Mombasa in favour of the port of Dar es Salaam to handle fuel imports.
Uganda, through Uganda National Oil Company (Unoc) will start directly buying fuel from Vitol Bahrain and had said that it would use the Dar es Salaam Port, after falling out with Kenya.
Kenya declined a request to have Unoc register as an oil marketing company locally in order to use Kenya Pipeline Company (KPC)’s network for handling and transporting fuel headed to Uganda.
The impasse between the countries prompted Uganda to hold talks with Tanzania over the use of the port of Dar es Salaam, a shift that would have hit KPC’s revenues besides denying Kenya tax collections.
“In response to your inquiry about the recent discussions between officials from Kenya’s Ministry of Energy and their counterparts in Kampala, I would like to inform you that the situation is still evolving,” the Ugandan Energy Ministry said in an emailed response.
“Unoc has been authorised under the amended Petroleum Supply Act to source and distribute petroleum products to all licensed oil marketing companies in Uganda, starting from January 1, 2024. This new mandate includes maintaining and optimising the existing oil supply routes, both through Kenya and Tanzania,” the Ugandan Ministry of Energy added.
A shift to the port of Dar es Salaam will significantly hurt KPC’s revenues given that Uganda is the single biggest market for the transit fuel imported through Kenya.
Such a move will also deny Kenya Revenue Authority taxes that it collects from management fees that local oil firms charge their Ugandan counterparts for handling transit fuel. KPC had early this year warned of the huge losses should Tanzania edge out Kenya in handling imported fuel for Uganda.
