Uganda seeks to cut oil deal with Kenya over 'supply vulnerabilities'

In a statement from the ministry on Tuesday, the land-locked nation seeks to cease its reliance on Kenya to access petroleum products citing exposure to "occasional supply vulnerabilities" and an increase in pump prices.

"These vulnerabilities paused additional challenges, resulting in Uganda receiving relatively costly products and ultimately impacting the retail pump prices," read part of the statement adding that the move has been prompted by Kenya's government-to-government importation deal with UAE and Saudi Arabia.

If the bill is passed into law, the ministry adds, Uganda shall maintain its overall responsibility of regulating the importation of petroleum products into Uganda by granting the Uganda National Oil Company Limited (UNOC) the mandate to source and supply petroleum products for their markets.

Currently, Uganda imports more than 90% of its petroleum products through the Port of Mombasa in Kenya and the rest through the Dar es Salaam port in Tanzania. 

The importation is done independently by the licensed Ugandan Oil Marketing Companies (OMCs) however through the importation structures in Kenya and Tanzania.

Uganda will now ensure that there will be buffer stocks in Uganda and Tanzania will be called upon should there be supply disruptions to the country as a move to guarantee the security of supply.

"The Ugandan government remains in active dialogue with the Government of Kenya for a seamless implementation of the policy change. Both nations share a commitment to regional stability and economic growth," read the statement. 

So far, the law has been approved by Cabinet and is now waiting Parliament's apporval.

This comes in the wake of an all-time-high fuel price hike in Kenya which has been said to be abetted by the high cost of living but experts have opined something to the contrary.

In Nairobi, a litre of petrol under the new pump price guidelines is Ksh.217.36 diesel Ksh.205.47 and kerosene Ksh.205.06.