The State-owned Uganda National Oil Company (Unoc) paid the Kenya Pipeline Company (KPC) Sh1.2 billion in the first year of a deal in which it directly imports petroleum products to its marketers back at home through the Mombasa port.
Disclosures show that Unoc paid the money as charges for the delivery of the refined fuel that it is directly importing in a deal with Vitol Bahrain.
Unoc started directly importing fuel for Uganda from May 2024, ending decades of reliance on the commodity previously imported by Kenyan-based oil marketers.
The disclosures show that some 16 oil marketers paid KPC Sh25.32 billion in the year ended June 2015 as fees for delivery of their imported fuel via the infrastructure of KPC.
“For each standard cubic metre of product delivered at a point of delivery, the OMC (oil marketing company) pays a tariff exclusive of all statutory charges and taxes. The applicable tariff is as agreed in the contract or as may be reviewed by KPC from time to time and approved by Epra (Energy Petroleum and Regulatory Authority),” KPC says.
Vivo Energy, retailer of Shell-branded fuel and lubricants, paid the highest fees at Sh4.94 billion, followed by TotalEnergies Marketing Kenya (Sh4.2 billion), Rubis at Sh3.12 billion, Gulf Energy (Sh2.62 billion), and Lake Oil at Sh1.45 billion.
The disclosures further show that KPC's revenues grew nine percent to Sh38.59 billion in the year ended June 2025, compared to Sh35.36 billion a year earlier, driven by increased fuel throughput along its network. Net profit marginally rose to Sh7.49 billion from Sh7.4 billion in the comparable period.
The amount of money that the oil marketers pay is directly proportional to the volumes of fuel imported, which explains why Vivo, the biggest oil marketer in Kenya, paid the highest.
Unoc started directly importing refined fuel through its deal with Vitol Bahrain in May 2023, following an acrimonious fallout with Kenya, where the Ugandan government said it was not consulted before Kenya inked a Government-to-Government deal with three Gulf oil majors.
Kenya rolled out a government -backed deal with Saudi Aramco, Abu Dhabi National Oil Company, and Emirates National Oil Company in April 2023, where the three supply fuel on a credit period of 180 days.
Kenya Pipeline Company (KPC) petroleum storage facility in the Industrial area, Nairobi.
Photo credit: File | Nation Media Group
But Uganda protested the deal, saying it was not consulted, besides blaming the Kenyan deal for expensive fuel in Kampala, triggering a fallout between the two neighbors.
Kenya rejected Unoc’s licence application in September 2023, prompting Uganda to file a case at the East African Court of Justice in a bid to force Kenya to issue the licence.
Unoc got the licence in early 2024, paving the way for the company to use the tanks and pipeline of KPC to handle refined fuel supplied by Vitol Bahrain.
Unoc had targeted to start the direct importation from the start of 2024, but was forced to indefinitely delay the roll-out amid delays in getting the license from Epra.
Uganda had turned to neighboring Tanzania as a short-term solution to allow Unoc directly import fuel after Kenya denied the State oil company access to the port of Mombasa and KPC’s infrastructure.
