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Revealed: Uganda still importing oil through Kenyan firms

Oil tankers delivering fuel to Uganda queue at the Busia border in Kenya. FILE PHOTO | NMG

Uganda is still relying on transit fuel imported by Kenyan Oil Marketing Companies (OMCs), even after the neighbouring country announced that it would start directly buying the commodity from Vitol Bahrain this month.

A schedule of the importation cargoes of fuel from November last year to this month, shows that the volumes of fuel for the transit market have largely remained unchanged, indicating that Uganda is still relying on the local OMCs.

Uganda through the State-owned Uganda National Oil Company (Unoc) was expected to start directly buying fuel from Vitol Bahrain effective January 1, 2024, putting an end to reliance on the transit fuel imported by local OMCs. Unoc would then use facilities owned by Kenya Pipeline Company (KPC) to handle the imports and transport them to Uganda.

The delayed start of Unoc’s direct fuel importation is a major win for Nairobi mainly due to revenues that KPC gets from transit fuel besides providing dollars that Kenya needs to make monthly payments to the three Gulf oil majors supplying fuel on credit.

The documents seen by this publication shows that a diesel cargo of 81,733 metric tonnes and which will be shipped by Galana Oil this month, has 22,401 metric tonnes for the transit market. The remaining 59,332 metric tonnes are for the Kenyan market.

Another schedule shows that out of 85,500 metric tonnes of diesel imported by Gulf Energy for the pricing schedule of December 2023 to January 2024, some 27, 825 metric tonnes ordered by 36 local OMCs were for the transit market.

Executives of local OMCs who spoke to this publication said they have retained similar volumes for the transit market.

“As it stands, we plan to supply to Uganda through the Port of Mombasa and the government-to-government deal,” said one of the executives.

Uganda had said Unoc would stop relying on the port of Mombasa to import the fuel and would instead use the port of Dar es Salaam.

But the President Yoweri Museveni administration changed tune and opted for the port of Mombasa, mainly because the route is cheaper compared to Dar es Salaam.

“The government of Uganda instructs Unoc to commence supplies through Kenya from January 2024,’ reads minutes of a meeting between Unoc and oil marketers in Uganda in November last year.

Kenya however refused to grant Unoc a local OMC license that would have allowed it to access the KPC facilities, a move that prompted Uganda to go to the East African Court of Justice in a bid to get the license.

The ongoing case at the regional court indicates that Uganda has gone slow on plans to use the port of Dar es Salaam to directly import fuel.