The Ugandan government has initiated discussions with Tanzania to explore the possibility of allowing the state-owned Uganda National Oil Company (Unoc) to channel its petroleum imports through Dar es Salaam. Unoc’s plan to become the sole importer of petroleum products into Uganda, sanctioned by Ugandan laws, has faced challenges from Kenya since September last year.
According to the Minister of Energy and Mineral Development, Ms. Ruth Nankabirwa, Kenya’s continuous obstruction of the Unoc deal poses a threat to Uganda’s fuel supply stability. Ms. Nankabirwa has engaged with Tanzanian authorities, seeking an alternative route for petroleum imports through Dar es Salaam.
Kenya’s Energy and Petroleum Regulatory Authority (EPRA) initially denied Unoc a Petroleum Import License in September. Although diplomatic efforts led to a directive from the Kenyan Minister of Energy instructing EPRA to lift requirements on Unoc, legal action by Kenyan citizens obstructed the process.
Uganda filed an application in the High Court of Machakos, seeking to dismiss the legal challenge from Kenyan citizens. The court issued an order on November 7, 2023, blocking EPRA from issuing Unoc the required license. The court’s judgment is expected on February 12, 2024.
Unoc aims to transition from the Open Tender System (OTS) to the Government-to-Government (G-2-G) model of fuel importation, in line with the Ugandan President’s directive. Under the G-2-G collaboration, Unoc, empowered by the Petroleum Supply Amendment Act, 2023, plans to oversee petroleum importation in partnership with Vitol, a Swiss-based Dutch company. The government intends to distribute these products to Oil Marketing Companies (OMCs).
To implement this plan, Unoc was initially tasked with using the Kenyan Pipeline to transport products to Kisumu, from where Ugandan trucks would pick them up. However, Kenya’s resistance and obstruction have hindered this aspect of the plan.
Ms. Nankabirwa emphasized the need to find a lasting solution and acknowledged that the alternative route might be more expensive due to logistical challenges. However, negotiations with Tanzania, including possible tax waivers, are being explored to facilitate the new petroleum importation plan.
The Ugandan government, through Unoc, anticipates a verdict from the East African Court of Justice next week on the case filed by the Attorney General urging EPRA to issue the license to Unoc. Uganda primarily sources over 90% of its petroleum imports through Mombasa, Kenya, with additional imports via Dar es Salaam.
