Months of tension between Kenya and Uganda over fuel import rights are finally coming to an end.
Kenya's Energy Cabinet Secretary, Davis Chirchir, announced that the government is finalizing a permit that will allow Uganda National Oil Company (UNOC) to import fuel directly through the Kenya Pipeline Company (KPC).
“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,” Chirchir stated.
According to Chirchir UNOC will utilize KPC’s infrastructure, ensuring continued revenue for the Kenyan transporter.
"We are working closely with Uganda to resolve the challenge," Chirchir added.
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This news comes after a lawsuit filed in Machakos High Court aiming to block UNOC's licensing was recently withdrawn.
Sources suggest the official license issuance is likely to happen next month.
The licensing move is expected to resolve the dispute and pave the way for UNOC to purchase fuel directly from Vitol Bahrain.
In December 2023, Uganda had even approached a regional court to fight for access to KPC's infrastructure.
While the court case remains unresolved, issuing the license is likely to see it dropped as both nations strive to prevent a diplomatic rift.
UNOC's entry into the Kenyan market as a direct importer will undoubtedly impact local oil marketing companies that have historically supplied Uganda.
Traditionally, UNOC has primarily catered to Ugandan state-owned entities, but this move signifies a shift towards serving private fuel distributors in the country.
It's important to note that Kenya's decision won't negatively affect the Kenya Pipeline Company.
Despite UNOC becoming a direct importer, KPC will continue to generate revenue by providing storage facilities and transportation networks for delivering fuel to Uganda.
The licensing assurance follows the withdrawal of a separate legal challenge against the Energy and Petroleum Regulatory Authority (EPRA) on March 22nd.
This case, filed by Royani Energy Limited, Acacia Ridge Construction, and two individuals, aimed to prevent EPRA from issuing the permit to UNOC.
Previously, Unoc's attempts to secure a license were hampered by failing to meet Kenyan regulations.
EPRA had denied the application due to Unoc's inability to demonstrate ownership of a licensed petroleum depot and at least five retail stations within Kenya.
Faced with Kenya's initial refusal to grant access to Mombasa port and KPC infrastructure, Uganda had explored a temporary solution – utilizing neighboring Tanzania as a transit point for UNOC's direct imports from Vitol Bahrain.
UNOC has already begun supplying fuel to oil firms in Tanzania and Uganda through the port of Dar es Salaam.
With the licensing dispute resolved, both Kenya and Uganda can move forward with a more collaborative approach to the regional fuel market.
