Uganda-Kenya fall-out over secret fuel Gulf deal: Uganda to cut fuel imports from Kenya

Uganda’s government has passed a bill for the Uganda National Oil Business (UNOC), a state-owned oil business, to domestically buy and supply oil, thus ending its dependence on neighboring Kenya for its oil needs, thus taking its fate into its own hands.

The bill is meant to terminate the present method of importing oil through Kenyan wholesalers but it is still pending an approval by the parliament. According to Energy Minister Ruth Nankabirwa, the goal of this new initiative is to “improve the security of supply of petroleum products to the country.” The minister disparaged the current agreement with Kenya, stating that “it exposed Uganda to occasional supply vulnerabilities, Ugandan oil marketing companies being considered secondary whenever there were supply disruptions,” which hiked fuel prices in Uganda.

Kenya’s Mombasa port handles over 90% of fuel imports of Uganda, a landlocked nation, while Tanzania’s Dar es Salaam port currently receives the remaining gasoline imports from Uganda, Nankabirwa noted.

This latest development comes on the heels of the signing of an agreement between Uganda and Vitol Bahrain EC, a Bahraini energy business, whereby the Bahraini company would fund the Uganda National Oil business’s efforts to procure and supply oil. Meanwhile, Ugandan officials have reportedly expressed dismay over Kenya’s undisclosed government-to-government fuel deal between East African country and two Gulf nations. This has led to a major fallout between Kampala and Nairobi over the decision to dump Kenya’s oil marketers in favor of its own state oil marketers UNOC, which will now be supplied directly from Vitol Bahrain. This falling out also threatens to seep into dollar exchange between the two countries at a time when the country desperately needs the greenback to pay for fuel imports.