Caption for the landscape image:

Kenya-Uganda oil tiff: Dodoma offer Kampala can’t refuse

A ship docked at the port of Dar es Salaam in Tanzania. PHOTO | SHUTTERSTOCK

Tanzania has seized a momentous opportunity in the Kenya-Uganda stalemate over oil importation with a raft of offers that Kampala cannot refuse.

The EastAfrican understands that President Samia Suluhu Hassan’s government has offered to register Uganda National Oil Company (Unoc) to use the Dar es Salaam port in the importation of fuel for Uganda as Kenya sticks to its guns on Uganda’s demands.

Meanwhile, a case that Kampala lodged at the East African Court of Justice (EACJ) awaits determination, with no set timelines although various sources have indicated a willingness by Uganda to withdraw it, on which Kenya is banking.

Presidents William Ruto, Yoweri Museveni and Samia recently converged in Zanzibar -- rare tripartite meeting reportedly requested by Uganda, people close to the discussions say, to seek assurance of Uganda’s smooth importation of petroleum and other products.

And while Kenya offers Uganda a pass through the Northern Corridor, it seems to insist on local regulatory processes, saying they are legal under Kenyan law. Nairobi is also opposed to Uganda’s decision to take the matter to the regional court.

Uganda sued Kenya in December last year at the East African Court of Justice, protesting Nairobi’s refusal to license Unoc to directly import fuel for Uganda as it sought a departure from the expensive private oil cartels. The Kenyan regulator, Energy and Petroleum Regulatory Authority (Epra), had been barred from licensing Unoc after oil marketers went to local courts to block the move.

According to sources Tanzania has registered Unoc and waived a number of local requirements to enable the company import oil. Some of those conditions include exemption of work permits, waivers on some taxes, free yards at the port, allowing Uganda to directly manage the company’s processes and reducing road blocks.

This week, some oil companies confirmed they had received supplies from the Unoc.

If Unoc finds it easier importing via Tanzania, it means Uganda could look away from Kenya in a significant shift, and hurt Kenya’s revenues. Kampala has imported most of its oil via the port of Mombasa, with 90 percent of that picked up through the Kenya Pipeline depots in western Kenya.

This week, Kenya said it was negotiating with Kampala to resolve the dispute over the fuel imports in spite of the case before the EACJ.
Trade Cabinet Secretary Rebecca Miano said discussions are underway to resolve the dispute.

“There are discussions that are likely to resolve the matter that is before court,” Ms Miano told The EastAfrican.

Uganda, meanwhile, admits that Tanzania has lobbied massively, targeting to convince Kampala to reroute all its oil business, and other import trade via Dar.

“The government of Tanzania has been very supportive and we are moving very fast in terms of getting access routes through the port of Dar,” Rose Nakabirwa, Uganda’s Minister for Energy and Mineral Resources told The EastAfrican.

But she was quick to clarify that Uganda won’t put all its eggs in one basket.

“We will still push to have access to the port of Mombasa because we have a right to be given access under the United Nations conventions. It is a shame to the diplomatic relations that we have had to go to court,” the minister said.

After the Zanzibar meeting on March 14, two things emerged, according to sources who spoke to The EastAfrican. While the three leaders see the need to end squabbling, they also see the utility of the political tool in their local rules. For Uganda, the competition between Kenya and Tanzania offers a bargaining chip.

Tanzania sees the tiff with Kenya as an opportunity to get a customer while Kenya has chosen to wait out for Uganda to tire.

“Tanzania’s entry in the tiff is frustrating because they want to offer their deal on the cheap. Kenya, on the other hand, has given Uganda what it offered before: Unoc has to apply and follow the relevant procedure,” a Kenyan official familiar with the talks told The EastAfrican.

Kenya says it can waive some of those requirements but does not want Uganda to question the regulatory processes. As such, the official indicated Kenya is willing to grant Unoc those waivers if Uganda formally withdraws the case at the EACJ.

“Kenya’s view is that these regulatory processes are not meant to hinder Uganda from accessing petroleum products but they are meant to instil transparency and accountability in dealing with petroleum products. This is consistent with Kenya’s Constitution,” the source indicated.

Kenya, Uganda and Tanzania are the founding members of the East African Community and the March 14 meeting was meant to demonstrate willingness to talk out disputes. It also marked the anniversary of the day, in 1996, when leaders from the three countries re-assembled in Arusha to re-establish the EAC, which had collapsed in 1977.

It was Ruto’s second time this year meeting with Museveni after the falling-out over oil importation and other trade disputes. Kenya roped in former prime minister Raila Odinga as some kind of “special envoy” to help broker negotiations. Raila’s achievement, officials say, was the re-establishment of the communication channels between Nairobi and Kampala, which had broken.

But it hasn’t ended the dispute yet, because officials also admit that there some senior political figures in Kenya keen to protect their stranglehold on the oil export business to Uganda. In turn, Uganda has chosen to bank on the protection of the East African Community legal regime.

In EACJ, however, Kenya has stuck to its guns, declaring the Ugandan case a waste of the court’s time. In a response filed by the Attorney-General, Nairobi said Uganda had, in fact, agreed to the regulatory processes demanded by Energy and Petroleum Regulatory Authority (Epra) and “cannot turn around and question their legal standing.”

“The Republic of Kenya, through its stated organs, and in good faith, sought to waive aspects of the Regulatory requirements, which intention, was, however, stayed by the High Court, an independent organ of the Republic of Kenya not subject to control or direction by any person or authority,” the Kenyan Attorney General said in filings on February 28.

Kenya says Uganda should have waited for the case in the Kenyan court to be determined before declaring that Nairobi had refused to provide Unoc with the licence. In fact, it argues that the EACJ cannot hear an appeal on issues guided and decided by Kenyan courts on local laws.

Kenya, through the Ministry of Energy and the Epra issued a raft of requirements that Unoc needed to comply with in order to get the licence.

Uganda claimed that Kenya had reneged on an earlier commitment, made in April 2023, to support Kampala’s quest to directly import its fuel starting January 2024.

“The actions of the Kenyan judiciary in issuing the conservatory orders restraining, among others, Epra from issuing the licence to Uganda contravenes the EAC Treaty,” said Uganda’s Attorney General in the suit at EACJ.

Uganda wants Kenya compelled to licence Unoc.

Kenya’s response to the EACJ, however, came a day late indicating that Kenya had hoped for a solution out of court.

The EACJ is yet to begin hearing the case.