Kenya and Uganda agree on fuel supplies

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

Uganda has struck a deal with Kenya, its main route for petroleum imports, after talks by officials from the two neighbouring countries in Nairobi.

Last month, Kampala had demanded fixed monthly transit petroleum product quotas to ease shortages amid anxiety over a fuel crisis.

Energy Cabinet Secretary Monica Juma met with Uganda’s top energy officials led by her counterpart Sidronious Okaasai.

“We reaffirmed Kenya’s commitment, as the gateway, to service the fuel needs of the region and discussed ways of enhancing cooperation through joint and complementary projects that accelerate regional integration,” said Dr Juma in an update.

Business Daily has not obtained additional details of the deal by press time.

Uganda, which accounts for 75 percent of fuel transported through Kenya, had wanted guarantees of monthly provision of 110,660 cubic metres of petrol and 110,400 cubic metres of diesel. Further, it demanded a fixed allocation of 12,000 cubic metres of aviation fuel.

“We are hopeful that some of these action areas could enable us to address petroleum product supply problems in Uganda,” Ugandan Permanent Secretary Irene Batebe had said last month in a letter to her counterpart in Kenya, Andrew Kamau. Both Ms Batebe and Mr Kamau attended the talks.

Ms Batebe had said the demands came after a meeting by oil marketers operating in Kampala linked the fuel supply crisis facing the country to inadequate allocations from Kenya.

Uganda also wanted its oil marketing firms to continue being supplied under the open tender system through their sister companies in Kenya. In addition, all Ugandan oil firms are to be allowed to load from Nairobi and other terminals, given the low capacity in western Kenya.

Kenya, a net importer of fuel, has also struggled with its own supply issues.

Oil marketers traditionally allocate 65 percent of their fuel imports to the local market and 35 percent to the transit market.

A number of the marketers increased the share of fuel they sell to the neighbouring countries to over 60 percent to ease their cash crunch, given that they are paid instantly, unlike in Kenya where the State compensation, through the fuel subsidy, delays.

John Tukwasiibwe, the Ugandan Commissioner in charge of Petroleum Supply, also attended the Nairobi talks.

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