Uganda is lobbying Kenya to lower the $40mn (~KShs. 5bn/UGX 147bn) bond fee for an undeclared surplus it shipped as it starts direct importation of refined petroleum products through the Kipevu Oil Terminal at the Port of Mombasa.
After some push and pull, Uganda got its way to import petroleum products directly through the Uganda National Oil Company (UNOC), without going through middlemen as was previously the case.UNOC’s first consignments arrived at the Port of Mombasa at the start of July, marking the start of a new phase where Kenya only earns a transit fee.According to Energy Minister Ruth Nankabirwa, the $40mn fee is too high and will lead to increased fuel prices for consumers as Uganda gets 90 percent of its petroleum through the Mombasa route.“I am still in negotiations with the Kenyan government to make sure that they don’t force on us this kind of thing. The bond fee at VTTI in Mombasa, that is Vitol terminal in Mombasa where we are storing our products; 40 million dollars is a deterrent. And this is not how the East African Community spirit should operate,” Minister Nankabirwa said on Sunday.
In the new market structure, the fuel is acquired for UNOC by Vitol Bahrain EC, shipped to the Port of Mombasa where it is discharged through the Kenya Pipeline Company’s network to Eldoret, Nakuru and Kisumu. It is then trucked across the border where it is sold to oil marketers.
In late 2023, Uganda threatened to shift its oil supply needs via the Tanga port in Tanzania, forcing Nairobi to back down and accept the direct importation route. In May 2024, Kenya refused to lower the fees UNOC has to pay for transit, meaning that it would be forced to pay $37.83 per cubic meter to use the KPC’s infrastructure.
