Court delays Uganda’s fuel importation deal again

The Kenyan High Court in Machakos County  on January 22 declined to dismiss a petition filed by some nationals, barring the state-owned Energy and Petroleum Regulatory Authority (Epra) from issuing a petroleum import licence to the Uganda National Oil Company (Unoc).

Officials from the Unoc who filed the injunction in December last year, told this publication yesterday that court further pushed their request to February 12, “but this time narrowing the issues from eight to two”.

A decision to block Epra from issuing a petroleum licence to Unoc was issued by Deputy Registrar of the High Court of Machakos on November 7, 2023 after Royani Energy Limited, Mr John Kinuthia Mwangi and Acacia Ridge Construction filed a law suit. 

The blockage affected the earlier January takeover of sole importation of the petroleum products by Unoc, who had by the new Petroleum Supply Amendment Act, 2023 been given powers to import petroleum products and later sell to more than 40 local oil marketing companies.

After registering a branch in Kenya, Unoc in September applied to Epra, seeking registration to freely import and export petroleum products.

The Daily Monitor’s Kenyan sister-platform, The Nation, reported that Epra  declined Unoc’s request on grounds that the latter failed to provide evidence of operating five licensed retail stations in Kenya, operating a licensed depot in Kenya, or achieving a minimum annual turnover of $10 million (Shs37.8 billion) for the last three years, which is a requirement for applicants with operations outside Kenya and also failed to substantiate the requisite annual sales volumes of 6.6 million litres of either super petrol,  gasoline (diesel), and/or jet A1/kerosene in Kenya.

As this issue was being resolved and Epra was planning to waive the conditions, the petitioners dragged the matter to court using the same arguments. Epra was blocked from issuing this licence to Unoc after Kenyan firms including; Royani Energy Limited, Charles Kombo, and Acacia Ridge Construction, in November successfully secured a court order from Machakos High Court in Kenya blocking the latter from getting the licence.

Their petition prompted Ugandan authorities to file an application asking the court to dismiss the case, which was first heard on December 6, 2023, pushed to December 19, and then to yesterday when the judge extended it again.

The Unoc’s head of legal and corporate affairs, Mr Peter Muliisa, yesterday told Daily Monitor that there is hope that the country will triumph in this case.

“Court narrowed down the eight issues that had been raised to only two and now we are focusing on them, which include whether the minister of Petroleum and Energy in Kenya by requesting Epra to waive off the requirements from Unoc does not interfere with the independence of Epra and the second one whether Epra has the legal mandate to waive the requirements,” he said.

“Where this has reached, we see hope because now we are going to focus on legal issues,” Mr Muliisa, who attended the Court session, said.

He noted that yesterday’s decision was not so good to jubiliate about, “but also poses hope of victory.

“Court helped us to get a clear point on where we shall argue from. We have hoped that we shall win and this is done,” he said.

Last March, Uganda decided to move away from the Open Tender System (OTS) model importing petroleum product to the Government-to-Government (G-2-G).

Unlike OTS where Kenyan oil marketing firms would supply Uganda with the petroleum products, the new system helps the government to, through Unoc, deal directly with gulf oil firms. Kenya had adopted the new method earlier.

The Petroleum Supply Amendment Act, 2023 was enacted in October last year, to give Unoc the sole deal, but Kenya has since frustrated the efforts.

Machakos’s November 7, 2023 decision prompted Attorney General Kiryowa Kiwanuka to drag Epra to the East African Court of Justice (EACJ). Mr Kiwanuka wants court to order the Epra to issue Unoc with the licence and also dismiss the Machakos case since the two countries are free to trade under the East African Community treaty. 

Mr Muliisa on January 22 said he was optimistic that the importation deal would be cleared since it is just a section of individual Kenyans fighting it.