Fuel standoff: Ruto woos Museveni with new petroleum pipeline

President William Ruto on Monday said the row between Kenya and Uganda over fuel supplies was being resolved following a meeting with President Yoweri Museveni.

Kenya and Uganda have been at loggerheads after Nairobi denied its landlocked western neighbour’s government-owned oil marketer a licence to operate locally and handle fuel imports to the capital Kampala.

Nairobi refused the use of the Kenya Pipeline Company (KPC) infrastructure to move its refined petroleum products from Mombasa port to Uganda.

It resulted in Uganda suing Kenya at the East African Court of Justice on December 28, accusing Kenya of denying the Uganda National Oil Company (UNOC) rights to operate as an Oil Marketing Company (OMC) in Kenya.

Through a social media post late Monday, Ruto said he and Museveni had charted a way forward on an effective way of sourcing fuel imports for the region.

“I am glad that the issues affecting the flow of petroleum products between Kenya and Uganda are being resolved. We have agreed on a way forward of sourcing and scheduling imports for the region in a manner that will ensure we achieve the most competitive pricing and maximum logistical efficiency,” wrote Ruto on X. 

He added; “In my meeting with President @KagutaMuseveni today, we also discussed the need for the two countries to urgently pursue the design and construction of the earlier conceptualized Eldoret-Kampala-Kigali refined petroleum product pipeline.”

Kenya has for decades imported and sold crude oil to its East African neighbours, with Uganda importing 90 per cent of its refined petroleum products through the Mombasa port and transporting them through KPC.

In denying UNOC an operating licence, Kenya said the Ugandan company had to register as an oil marketer with Kenya’s Energy and Petroleum Regulatory Authority (EPRA) to allow it to import and export petroleum products through Kenya using the country’s pipeline.

EPRA asked that UNOC produce business registration certificates; identification documents for all directors; work permits; tax compliance certificates; proof of financial capability including proof of sales volumes of 6.6 million litres of super petrol or gasoil or A1jet or kerosene in Kenya; evidence of operating five licensed retail stations and a licensed depot with a turnover of $10 million over the last three years.

‘IRRATIONAL PROTOCOLS’

UNOC could not provide all the required documents and termed some of the requirements a burden, arguing that it was a fully state-owned company in Uganda that only sought to transport products through Kenya, not doing business in the country.

It sought exemption, which Kenya said it would consider at the Cabinet level.

In its suit at the East Africa Court of Justice, Uganda holds Kenya responsible for this delay in granting exemptions.

Kenya’s western neighbour wants the licensing protocols imposed by EPRA on UNOC declared irrelevant, irrational and illegal.

Kampala further accuses Nairobi of going against the treaty for the establishment of the East African Community by restraining EPRA from issuing the OMC license to Uganda.

It wants the court to declare that the landlocked country does not require a license from EPRA to access the KPC’s systems and transport petrol from Mombasa to Uganda.

Uganda also wants Kenya to unconditionally accord UNOC commercial terms for the use of KPC, no less favourable than it accords to other suppliers, and it also wants a permanent injunction issued against Nairobi from imposing unrealistic restrictions on UNOC accessing KPC.

As a result of the disagreement, Uganda has signed a five-year contract with an Arab company which UNOC will source fuel directly from.

The country has also been in talks with Tanzania to use the Port of Dar es Salaam to handle the fuel imports.

This, the Petroleum Outlets Association of Kenya (POAK) told Business Daily, would deal a blow to local OMCs.

“If Uganda indeed moves to the Tanzania route a lot of local oil companies will really suffer because they will lose their biggest market,” POAK chairman Martin Chomba told the publication.