A diplomatic tiff is threatening to brew following President William Ruto’s administration's failure to award Uganda a licence to import fuel.
Ugandan President Yoweri Museveni, on November 7, accused Kenyan middlemen in the oil sector of inflating fuel prices in his country.
As such, he directed the state-owned Uganda National Oil Company (UNOC) to start the importation of oil, a decision that was ratified by the Ugandan parliament a week later. A month later, UNOC has yet to roll out the importation of fuel and continues to rely on oil marketing companies from Kenya.
Uganda had filed an application with the Energy and Petroleum Regulatory Authority (EPRA) to be recognised as an Oil Marketing Company (OMC) in Kenya, and Ruto's regime was yet to ratify the neighbouring country's plea.
Reports alleged that Kenya feared Uganda would enjoy its infrastructure despite reneging on their initial oil deal. Uganda was also accused of failing to provide evidence of operating five licensed retail stations and a licensed depot in Kenya, among other issues.
Uganda has now issued an ultimatum that it will start importing petroleum products on its own starting from February 2024. According to reports, Uganda has vowed to import the fuel through Mombasa Port with or without the licence.
UNOC, in its plan, wants to concentrate only on the importation process so as not to be subjected to inflated fuel prices by Kenyan Oil Marketers.
“Why not buy from the refineries abroad and transport through Kenya and Tanzania, cutting out the cost created by middlemen?” Museveni had directed UNOC.
The Ugandan oil corporation thus stated that it would not be involved in the transportation of the fuel once it landed in Mombasa. It was not immediately clear how the UNOC aimed to implement the ultimatum of using Kenyan ports to import fuel without a licence.
Uganda imports 2.5 billion litres of fuel annually at a cost of Ksh300 billion. Of this amount, 90 per cent is imported through Kenya, with only a paltry 10 per cent coming through Tanzania.
In November, Irene Batebe, Uganda's Energy Permanent Secretary, refuted reports that Ruto's government had declined to approve its request to be recognised as an Oil Marketing Company (OMC) in Kenya.
While speaking to Uganda's Daily Monitor, Batebe argued that the two countries were still engrossed in high-stakes negotiations to ratify the new changes in the importation of oil.
"Our discussion with Kenya on the bulk trading with Unoc (Uganda National Oil Company) is progressing well. That is my comment on that," Batebe stated while declining to divulge more information.
