Uganda is yet to withdraw the case filed against Kenya, bringing into question the truce the two countries entered into allowing Uganda National Oil Company (Unoc) to import fuel through the port of Mombasa.
The East African Court of Justice deputy registrar Christine Mutimura-Wekesa confirmed that Uganda has not yet filed a notice to withdraw the case filed last December.
“No Notice of Withdrawal has been filed…. We are yet to schedule the hearing as the Court works on a "first in-first out" basis and so priority will be given to matters filed earlier,” she said.
Uganda went to the regional court after Kenya declined to issue Unoc with a licence that would have granted it access to the storage and transport facilities of Kenya Pipeline Company (KPC) in September last year.
Uganda imports an average of 2.5 billion litres of petroleum annually valued at $2 billion (Sh264 billion), with KPC and local oil firms handling at least 90 percent of the cargo.
The Uganda government kicked off plans for the direct imports deal through Unoc months after Kenya announced an agreement with the Gulf majors to import fuel on a 180-day credit period to ease dollar demand and prop up the shilling.
Kenya started the government-backed deal with Saudi Aramco, Abu Dhabi National Oil Corporation, and Emirates National Oil Company in April last year. The deal was to expire at the end of last year but was extended to December 2024.
The two countries, however, resolved the matter late last month, paving the way for Unoc to get access to the petroleum storage and transport facilities of KPC.
“You will see Unoc getting a licence and then we will see how to work together because usage of our pipeline is an opportunity for us,” Energy Cabinet Secretary Davis Chirchir said last month. “They will employ Kenya Pipeline Company’s infrastructure so there will be no loss of opportunity; the transporter will remain KPC. We are working closely with Uganda to resolve the challenge”.
With the pronouncement, the expectation was that Uganda would withdraw its case at the regional court against Kenya. This has not happened yet, raising fresh questions about the state of the diplomatic ties between the two neighbours.
Uganda previously accused Kenya of deliberately stalling its efforts to directly import fuel. Unoc had targeted to start the direct importation from the start of this year but was forced to indefinitely delay the roll-out after it failed to get a licence from Kenya’s Energy and Petroleum Regulatory Authority (Epra).
The sector regulator had initially declined to issue the licence, saying Unoc had failed to comply with the law. Epra cited Unoc’s failure to show proof of owning a licensed petroleum depot and at least five retail stations in Kenya.
This saw Uganda turn to neighbouring Tanzania as a short-term solution to allow Unoc to directly import fuel after Kenya denied the State oil company access to the port of Mombasa and KPC’s infrastructure.
Unoc has been offering cargo supplied by Vito Bahrain through the port of Dar es Salaam to oil firms in Tanzania and Uganda as it gears up to roll out the direct import deal.
Unoc is June expected to make the first import of fuel from Vito Bahrain under a five-year deal that Uganda hopes will offer cheaper fuel than what is supplied by local oil marketers under the government-backed deal that Kenya signed with three Gulf oil majors.
Vitol is a Switzerland-based Dutch oil multinational. It partly owns the Fujairah Refinery in the United Arab Emirates (UAE).
But the practicality of cheaper fuel to Uganda under the deal has been thrown into question given the small quantities that Uganda will be importing.
Kenya barred Unoc from importing fuel for the regional market as part of the tough conditions issued in line with the licence granted at the end of last month.
"The licence shall be for the importation and exportation (transit) of refined petroleum products only,” reads the licence which will be valid for a year to March 27, 2025.
Uganda’s Ministry of Energy and Mineral Resources early this month said that Unoc's deal with Vitol Bahrain will see Uganda get cheaper fuel compared to what Kenya supplies.
Currently, Uganda has the second costliest fuel in the East African region after Kenya.
A litre of Super petrol is going for $1.478 in Nairobi and $1.46 in Uganda while Tanzania has the cheapest of the commodity at $1.26.
A litre of diesel is going for $1.37 in Nairobi, followed by $1.31 in Kampala while the commodity is cheapest in Dar es Salaam at $1.24.
"Unoc will be bringing in a ship of about 80,000 tonnes of fuel and that logically raises questions on how Uganda can get cheaper fuel under the deal given the small volumes," a senior Kenyan government official who is in the energy sector told this publication.
