Uganda sues Kenya over fuel importation saga

The tussle between Kenya and Uganda over the importation of Uganda petroleum products has moved to the East African Court of Justice (EACJ) corridors.

Uganda is suing Kenya over her refusal to allow it use of the Kenya Pipeline Company (KPC) infrastructure to move its refined petroleum products from Mombasa port to Uganda under a new arrangement as directed by Uganda’s Cabinet.

In the suit, Uganda accuses Kenya of denying its entity, the Uganda National Oil Company (UNOC), the rights to operate as an Oil Marketing Company (0MC) in Kenya.

Uganda, through the UNOC, had sought to move fuel products through Kenya Pipeline but was directed to register as an oil marketer in Kenya by the Energy and Petroleum Regulatory Authority (EPRA), a move that would allow UNOC to import and export petroleum products through Kenya and use the country’s pipeline to do so.

EPRA had asked UNOC to fulfil a number of requirements, among them; business registration certificates, identification documents for all directors, work permits, tax compliance certificate, proof of financial capability including proof of sales volumes of 6.6 million litres of super petrol/gasoil or A1jet or kerosene in Kenya, evidence of operating five licensed retail stations and operating a licensed depot with a turnover of USD 10 million over the last three years.

UNOC could not provide all the required document s and found some of the requirements a burden, arguing that it was a fully State-owned company in Uganda that only sought to transport product through Kenya and had no intention of doing business in Kenya.

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

A case was filed at the Machakos High court on November 7, 2023 that listed Royani Energy Ltd as 1st petitioner, Charles Kombo as 2nd petitioner, John Kinuthia Mwangi and Acaccia Ridge Construction as 3rd petitioner, against Energy Cabinet Secretary, the Attorney General, EPRA Director General and UNOC.

It sought to stop the granting of exemptions to UNOC, with Justice Francis Rayola Olel granting conservatory orders against any such exemption for UNOC.

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

Uganda is seeking to have the licensing protocols imposed by EPRA on UNOC declared irrelevant, irrational and illegal.

Uganda, in court documents, also accuses Kenya of going against the treaty for the establishment of the East African Community by restraining EPRA from issuing the OMC license to Uganda.

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

It also wants Kenya to unconditionally accord as a UNOC a service supplier of the republic of Uganda, 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 Kenya from imposing unrealistic restrictions to UNOC accessing the KPC.

Uganda currently imports 90% of her refined petroleum products through the port of Mombasa, and transports them to Uganda through the Kenya State-owned KPC.

Uganda’s petroleum products supply has been handled by the oil marketing companies, and through the government-to-government arrangements between Kenya and foreign governments adopted in early 2023 by Kenya, meaning that the OMCs operating in Kenya import petroleum products and in turn sell the same to Uganda’s OMCs.

Uganda argues that the complete reliance and dependency on Kenyan OMCs to import and supply petrol products to Uganda has exposed it to supply vulnerabilities resulting in avoidable increases in fuel pump prices, hence the decision by Uganda to import directly through UNOC.

But as Uganda waits for the case it has filed at the EACJ to be heard and determined, it is expected to cease buying fuel from Kenyan OMCs after it entered into a five-year contract with an Arab company that will now supply its entire fuel needs.