Kenya is actively lobbying Uganda to persist with the use of the port of Mombasa to safeguard its position as a crucial transit point for Uganda’s fuel imports. The high-level discussions, confirmed by Uganda’s Ministry of Energy and Mineral Development, transpired in November amid growing concerns that Uganda might opt for the port of Dar es Salaam over Mombasa for handling its petroleum product imports.
The tension between the two nations escalated when Kenya declined Uganda’s request for the Uganda National Oil Company (Unoc) to register as a local oil marketing company. This registration would have enabled Unoc to utilize the Kenya Pipeline Company (KPC)’s network for the handling and transportation of fuel destined for Uganda.
Uganda, via Unoc, is set to commence direct purchases of fuel from Vitol Bahrain this month. Initially planning to utilize the port of Dar es Salaam due to the disagreement with Kenya, Uganda’s shift prompted Kenya to engage in diplomatic efforts to maintain its role in the supply chain.
The Ugandan Ministry of Energy responded to inquiries, stating, “Unoc has been authorized 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 mandate encompasses maintaining and optimizing existing oil supply routes, both through Kenya and Tanzania.
A potential shift to the port of Dar es Salaam would not only impact KPC’s revenues but also affect Kenya Revenue Authority’s tax collections derived from management fees charged by local oil firms to their Ugandan counterparts for handling transit fuel. Uganda represents the largest market for transit fuel imported through Kenya, making it a critical economic consideration for both nations.
