In a bid to resolve the escalating fuel dispute between Kenya and Uganda, President William Ruto engaged in high-level talks with Ugandan President Yoweri Museveni on Monday. The standoff arose after Kenya denied Uganda’s government-owned oil marketer, the Uganda National Oil Company (UNOC), a license to utilize the Kenya Pipeline Company’s (KPC) infrastructure to transport refined petroleum products from Mombasa to landlocked Uganda.
This refusal prompted Uganda to take legal action against Kenya at the East African Court of Justice, accusing Kenya of obstructing UNOC’s rights to operate as an Oil Marketing Company (OMC) within Kenya. However, in a recent social media post, President Ruto announced significant progress in resolving the dispute after his meeting with President Museveni. They agreed on an effective strategy for sourcing fuel imports for the region, emphasizing competitive pricing and logistical efficiency.
Moreover, Ruto and Museveni discussed the urgent need for the design and construction of the Eldoret-Kampala-Kigali refined petroleum product pipeline, aiming to enhance regional energy infrastructure. For decades, Kenya has been a crucial supplier of crude oil to its East African neighbours, with Uganda relying on imports for 90% of its refined petroleum products through the Mombasa port via KPC.
The dispute arose when Kenya demanded that UNOC comply with registration requirements set by Kenya’s Energy and Petroleum Regulatory Authority (EPRA) to operate as an oil marketer in Kenya. Despite UNOC’s attempts to secure exemptions, citing its status as a state-owned enterprise in Uganda, Kenya maintained its stance, leading to legal action from Uganda.
Uganda’s lawsuit seeks to challenge the licensing protocols imposed by EPRA on UNOC, arguing that they are irrelevant, irrational, and illegal. Additionally, Uganda accuses Kenya of violating the treaty for the establishment of the East African Community by restricting UNOC’s access to KPC systems.
In response to the deadlock, Uganda has pursued alternative fuel import arrangements, including signing a contract with an Arab company and exploring options with Tanzania’s Port of Dar es Salaam. This development has raised concerns among Kenyan oil dealers, who fear losing their largest market if Uganda shifts its imports to Tanzania.
The ongoing negotiations between Kenya and Uganda highlight the complexities of regional energy cooperation and the importance of diplomatic efforts in resolving disputes that impact cross-border trade and economic relations.
