Uganda has yet to withdraw the case against Kenya, raising doubts about the truce the two countries entered into to allow the Uganda National Oil Company (UNOC) to import fuel through the port of Mombasa.
Deputy Registrar of the East African Court of Justice, Christine Mutimura-Wekesa, confirmed that Uganda had not yet filed notice of withdrawal of the case filed last December.
No notice of withdrawal was given… “We have not yet scheduled a hearing because the court operates on a ‘first in, first out’ basis and therefore previously filed matters will be given priority,” she said.
Uganda went to the regional court after Kenya refused to issue a license to UNOC that would have given it access to the storage and transportation facilities of the Kenya Pipeline Corporation (KPC) in September last year.
Uganda imports an average of 2.5 billion liters of oil annually worth $2 billion (264 billion shillings), with KPC and local oil companies handling at least 90 percent of the shipment.
The Ugandan government began plans for a direct import deal through UNOC months after Kenya announced an agreement with major Gulf companies to import fuel on a 180-day credit period to ease demand for the dollar and support the shilling.
Kenya began the government-backed deal with Saudi Aramco, Abu Dhabi National Oil Corporation and Emirates National Oil Company in April last year. The deal was scheduled to expire at the end of last year but has been extended until December 2024.
However, the two countries settled the matter late last month, paving the way for UNOC to access Kuwait Petroleum Corporation's oil storage and transportation facilities.
“You will see UNOC get a license and then we will see how we work together because using our pipeline is an opportunity for us,” Energy Cabinet Secretary Davis Churcher said last month. “They will use Kenya Pipeline Corporation’s infrastructure so that there is no loss of opportunity; the carrier KPC will remain. We are working closely with Uganda to resolve this challenge.
With this announcement, Uganda was expected to withdraw its case before the regional court against Kenya. This has not yet happened, raising new questions about the state of diplomatic relations between the two neighbors.
Uganda previously accused Kenya of deliberately obstructing its efforts to import fuel directly. Unoc had aimed to start direct imports from the beginning of this year, but was forced to postpone implementation indefinitely after failing to obtain a license from the Kenya Energy and Petroleum Regulatory Authority (Epra).
The sector's regulatory body had initially refused to issue the licence, saying that UNOC had failed to comply with the law. Ibra cited UNOC's failure to provide evidence that it owned a licensed petroleum depot and at least five retail stations in Kenya.
This led to Uganda turning to neighboring Tanzania as a short-term solution to allow UNOC to import fuel directly after Kenya blocked the state oil company from accessing the Mombasa port and KPC infrastructure.
UNOC is offering the goods supplied by VITO Bahrain through the port of Dar es Salaam to oil companies in Tanzania and Uganda as part of its preparations to launch a direct import deal.
UNOC is expected in June to import fuel from VITO Bahrain under a five-year agreement that Uganda hopes will offer cheaper fuel than local oil marketers provide under the government-backed agreement Kenya signed with three major Gulf oil companies.
Vitol is a Dutch multinational oil company based in Switzerland. It partly owns the Fujairah refinery in the United Arab Emirates.
But the practicality of the cheaper fuel for Uganda under the deal has been called into question given the small quantities Uganda will import.
Kenya has banned UNOC from importing fuel to the regional market as part of strict conditions issued in line with the license granted at the end of last month.
The text of the license, which will be valid for one year until March 27, 2025, states: “The license is intended for the import and export (transit) of refined petroleum products only.”
Uganda's Ministry of Energy and Mineral Resources said early this month that UNOC's deal with Vitol Bahrain would see Uganda access to cheaper fuel compared to what Kenya provides.
Currently, Uganda has the second most expensive fuel in the East African region after Kenya.
The price of a liter of premium gasoline reaches $1,478 in Nairobi and $1.46 in Uganda, while Tanzania has the cheapest commodity at $1.26.
The price of a liter of diesel is $1.37 in Nairobi, followed by $1.31 in Kampala, while the commodity is cheapest in Dar es Salaam at $1.24.
A senior Kenyan government official working in the energy sector told this publication: “UNOC will bring a ship with a capacity of about 80,000 tons of fuel, and this raises logical questions about how Uganda will get cheaper fuel under the deal given the small quantities.”