Kenya Rejects Uganda’s Oil Pipeline Request

Nairobi, Kenya | THE BLACK EXAMINER | In September, Kenya rejected Uganda’s request to utilize its oil pipeline, expressing concerns about potential displacement of local oil marketing companies (OMCs) from pipeline usage. Consequently, Uganda has secured a five-year contract with Vitol Bahrain E.C to exclusively supply its fuel needs starting on January 1, 2024.

Kenya currently provides approximately 90% of Uganda’s fuel, with the remaining 10% sourced through Tanzania. Uganda’s State-owned Uganda National Oil Company (UNOC) sought registration as an OMC in Kenya to access the Kenya Pipeline Company’s (KPC) pipeline. However, the Energy and Petroleum Regulatory Authority (Epra) declined UNOC’s application due to inability to substantiate the required annual sales volumes, operation of licensed facilities, and minimum turnover in Kenya.

UNOC attempted to secure necessary waivers from the Government of Uganda to meet Epra’s standards and gain approval. Yet, approval by Epra would have potentially displaced Kenyan companies allocated capacity by KPC, creating further challenges for OMCs.

However, the Energy and Petroleum Regulatory Authority (Epra) in Kenya declined UNOC’s application, as UNOC could not substantiate the necessary annual sales volumes in Kenya. Additionally, UNOC lacked evidence of operating five licensed retail stations, a licensed depot, or achieving the required minimum annual turnover for applicants with operations outside Kenya.

UNOC sought waivers from the Government of Uganda to meet Epra’s standards. An approval by Epra would have resulted in Kenyan companies being displaced from their KPC allocations to accommodate UNOC, which would have further impacted OMCs. The source highlighted that the current demand for line fill in the KPC system is held by oil marketers, and reallocating it to UNOC could be seen as nationalization and a violation of the property rights of established oil marketers.

The impasse occurs just months before Vitol is set to commence delivering significant fuel quantities to Uganda. While talks continue between the two countries to find a solution, it remains uncertain whether Kenya will grant UNOC concessions to use KPC’s facilities for fuel transportation.

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