Summary:

• Kenya is poised to grant Uganda’s National Oil Company a license to import fuel, ending a lengthy dispute and potentially reshaping regional fuel dynamics.

Kenya is set to grant the Uganda National Oil Company (Unoc) a long-awaited license, bringing an end to months of contentious dispute that had escalated to the regional court and strained diplomatic relations between the two nations.

Davis Chirchir, the Energy Cabinet Secretary, announced on Wednesday that preparations are underway to issue a permit allowing Unoc to directly import fuel through the Kenya Pipeline Company (KPC).

Chirchir stated, “The imminent issuance of a license to Unoc marks a significant opportunity for collaboration, as their utilization of our pipeline infrastructure presents mutual benefits.”

This development follows recent withdrawals of legal challenges against Unoc’s licensing, indicating a likelihood of issuance in the coming month. The resolution of this licensing issue could potentially resolve the ongoing dispute and facilitate Unoc’s procurement of fuel from Vitol Bahrain.

Uganda had pursued legal avenues to secure access to KPC’s infrastructure, highlighting the importance of this licensing in averting further diplomatic tensions. Unoc’s prospective direct imports pose a challenge to local oil marketers in Uganda, as it shifts the dynamics of fuel supply towards private entities.

This initiative by Uganda emerges amidst Kenya’s efforts to stabilize its fuel imports through agreements with Gulf majors, aiming to alleviate currency pressure and support the local economy. Despite potential disruptions to local markets, KPC stands to maintain its revenue streams as Unoc leverages its storage and transport facilities.

The recent withdrawal of legal opposition to Unoc’s licensing signifies progress towards resolving regulatory hurdles. Kenya’s Energy and Petroleum Regulatory Authority (Epra) had initially withheld the license, citing compliance issues pertaining to Unoc’s ownership and operational requirements.

While initially exploring alternative routes via Tanzania, Unoc’s direct imports are poised to streamline fuel procurement processes, potentially reshaping regional fuel dynamics in the process.