Kenya to Lose Ksh15 Billion after Uganda Diverts Oil Imports

Kenya to Lose Ksh15 Billion after Uganda Diverts Oil Imports

Share on Socials

A bill ending Uganda’s decades-long reliance on Kenyan companies for oil imports has been passed in the Uganda Parliament.

The bill grants State-owned oil Uganda National Oil Company (UNOC) exclusive authority to import all petroleum products.

If approved by President Yoweri Museveni, the bill will end Uganda’s -long reliance on Kenyan companies for oil imports. Currently, the companies in the Gulf supply petroleum products to only three Kenyan companies that in turn sell to Uganda’s oil marketing companies.

The decision could see Kenya lose up to $100 million (Sh15.23 billion) it has been earning from handling Uganda’s petroleum and related products per year.

Members of Parliament (MPs) who supported the bill said it would usher in a new era of enhanced supply security, stabilised pump prices, and increased revenue generation for UNOC to support vital infrastructure projects.

Uganda, a landlocked country, imports more than 90 per cent of its fuel through Mombasa port and the remainder through Tanzania’s Dar es Salaam port.

About 40 per cent of the fuel Kenya imports is exported, mostly through Uganda to the Democratic Republic of Congo and South Sudan.

Uganda’s Energy Minister Ruth Nankabirwa recently said that the country needed to stop importing oil through Kenyan companies as it “exposed Uganda to occasional supply vulnerabilities where Ugandan oil marketing companies were considered secondary whenever there were supply disruptions”.

“Kenya has for decades decided what petroleum products Uganda buys, when, from where, how much, who buys and at what price,” Nankabirwa said.

Dr Joseph Muvawala, the executive director of the National Planning Authority had asked the government of Uganda to consider direct importation of crude from oil-producing and exporting countries. This, he said, would result in prices at the pump dropping by 15 to 20 per cent.

With UNOC assuming the pivotal role of the exclusive importer, the country is poised to achieve a higher degree of self-sufficiency and autonomy in meeting its energy requirements.

Ugandan officials said the strategic shift is expected to have far-reaching implications, including the elimination of additional markups on fuel, the reduction of unpredictability in pump prices, and the liberation of Ugandans from the influence of fuel cartels that have historically impacted pricing.




Share on Socials