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Relief as UNOC finally secures Kenyan oil import licence

Peter 2nd Apr, 2024 Energy Pedson Mumbere & Agencies
Relief as UNOC finally secures Kenyan oil import licence

UNOC's petroleum reservoirs in Jinja could soon not be enough. FILE PHOTO


The Uganda National Oil Company (UNOC) will effective next month start importing petroleum products through Kenya following the end of a bitter dispute between the two regional partners over direct oil imports through the Kenyan port of Mombasa.

For years, Uganda has imported petroleum products through Kenyan companies and middlemen, who have been selling them to landlocked East African partner States. Last year, Uganda's President Yoweri Museveni accused Kenyan resellers and middlemen of inflating fuel prices by up to 58% and said Uganda has been 'cheated' by the fuel resellers to a 'huge loss' for long enough.

For years, Uganda has been importing 90% of the petroleum products it consumes from oil marketing companies in Kenya, which do sell it to their Ugandan subsidiaries who then sell it to the companies for sale to the final consumer at the pumps.

  • Now, Kenya has agreed to allow Uganda's state oil firm UNOC to receive a license to import petroleum products directly from the Middle East without going through the third parties.

Licensing UNOC to import refined petroleum products ends a row that has lasted for months and saw international courts get involved as Uganda sought redress.

Early this year, Uganda sued Kenya at the East African Court of Justice after Kenya denied UNOC a licence to operate in Kenya and directly handle petroleum imports headed to Uganda.

  • The oil import row escalated to strained diplomatic relations between the two neighboring countries until President Willam Ruto visited his counterpart in Kampala early last month.
Relief as UNOC finally secures Kenyan oil import licenceThe final pump prices could only see a slight drop as Government intends to increase tax on fuel in the next budget. FILE PHOTO

Following the decision by President Ruto to broker an out-of-court settlement, Ugandan officials traveled to the Kenyan capital Nairobi to conclude the deal.

"You will see UNOC getting a licence and then we will see how to work together because usage of our pipeline is an opportunity for us," Davis Chirchir, Kenya's Cabinet Secretary in charge of Energy and Petroleum, was quoted by Kenyan media as saying.

UNOC will use the Kenya Pipeline Company's infrastructure so there will be no loss of opportunity for Kenya, he added, noting that; "We are working closely with Uganda to resolve the challenge."

Ms Ruth Nankabirwa, Uganda's Minister of Energy and Mineral Development, has welcomed the move saying that in addition to lowering the pump price of petrol to the final consumer, UNOC also hopes to obtain the essential oil business experience as Uganda gears up to be an oil producer by 2025.

  • However, Ugandan motorists might not see a significant decrease in pump prices from the current over UGX5,000 per liter, following the Government's decision to increase tax on each litre of fuel sold, effective next financial year.
  • Nankabirwa however said the country's prospects have registered yet another key milestone following the recent commissioning of the East African Crude Oil Pipeline (EACOP) Coating Plant, in the Tabora Region of Tanzania.

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