Uganda persists in depending on transit fuel supplied by Kenyan Oil Marketing Companies (OMCs), despite Kenya’s recent announcement of its intention to procure the commodity directly from Vitol Bahrain starting this month.
A detailed schedule outlining fuel importation from November of the previous year until the present month reveals that the quantities of fuel for the transit market have largely remained constant, indicating Uganda’s continued reliance on local OMCs.
Uganda, represented by the State-owned Uganda National Oil Company (UNOC), had initially planned to initiate direct fuel purchases from Vitol Bahrain effective January 1, 2024. This move aimed to eliminate dependence on transit fuel supplied by local OMCs, with UNOC utilizing facilities owned by the Kenya Pipeline Company (KPC) for handling and transporting the imports to Uganda.
The delayed commencement of UNOC’s direct fuel importation serves as a significant advantage for Nairobi. The revenues generated by KPC from transit fuel, in addition to providing essential dollars for Kenya’s monthly payments to Gulf oil majors supplying fuel on credit, contribute to this advantage.
According to documents obtained by this publication, a diesel cargo of 81,733 metric tonnes, to be shipped by Galana Oil this month, includes 22,401 metric tonnes designated for the transit market, with the remaining 59,332 metric tonnes allocated for the Kenyan market.
An additional schedule reveals that out of the 85,500 metric tonnes of diesel imported by Gulf Energy for the pricing period of December 2023 to January 2024, approximately 27,825 metric tonnes ordered by 36 local OMCs were intended for the transit market.
Executives from local OMCs, in communication with this publication, affirm that they have maintained similar volumes for the transit market.
Despite earlier plans to shift to the port of Dar es Salaam for fuel imports, Uganda has opted to continue using the port of Mombasa, citing cost-effectiveness. The change in strategy was confirmed by the administration of President Yoweri Museveni.
“The government of Uganda instructs UNOC to commence supplies through Kenya from January 2024,” reads minutes from a meeting between UNOC and oil marketers in Uganda held in November of the previous year.
However, Kenya’s refusal to grant UNOC a local OMC license, which would have allowed access to KPC facilities, led Uganda to seek intervention from the East African Court of Justice to obtain the license.
The ongoing legal proceedings at the regional court indicate a slowdown in Uganda’s plans to utilize the port of Dar es Salaam for direct fuel imports.
