Uganda has threatened to stop procuring oil through Kenya from January as it protests being left out in the government-to-government deal with Gulf nations, a decision it says has made its supplies vulnerable and exposed its citizens to expensive pump prices.
If President Yoweri Museveni goes ahead to effect the plan, Uganda will block Kenya’s oil marketers from exporting oil into its territory in favour of its national oil company --the Uganda National Oil Company (Unoc) -- which will buy fuel directly from Vitol Berlin.
The fallout, which is set to further strain the relationship between Kenya and its biggest trading partner, also threatens to cut significant inflows of dollars into Nairobi, at a time the country desperately needs the greenback to pay for the fuel imports.
But it is Kenya’s oil marketers who will shoulder the biggest burden from the decision since they will lose any margins they make from selling to their subsidiaries in the neighbouring country.
Kenya signed the fuel deal with Saudi Arabia and United Arab Emirates in March allowing for importation of fuel on an-180-day credit period.
Uganda’s decision looks set to test the diplomatic relations between the two countries, coming months after operationalisation of the Kisumu oil jetty.
The fallout is another lesson for Kenya on the need to consult widely with all its stakeholders before effecting any new policies, however groundbreaking. It is not too late for Kenya to reach out to Uganda and resolve the challenges it has raised, in the spirit of the East African Community.
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