Ugandan oil imports land, ending the fuel transit activity of Kenyan companies

On Wednesday, the first oil shipment headed for Uganda arrived at the Mombasa port, signaling the end of Kenyan oil market businesses’ fuel transit operations to the neighboring nation.

Docked at the new Kipevu Oil Terminal 2 (KOT2) around 7.15 am (GMT +3), the Liberian-flagged tanker MT Navig8 Matines carried approximately 60,000 metric tonnes of gasoline, while the second vessel, MT SINBAD, carried approximately 70,000 metric tonnes of diesel and was slated to arrive in Mombasa on Wednesday night.

Uganda Energy Minister Ruth Nankabirwa, Uganda National Oil Corporation (Unoc) board chairman Mathias Katamba, and CEO Proscovia Nabbanja led the nation’s delegation in welcoming the consignment, and the first ship was greeted with water cannon salute celebrations.

“After more than a year of negotiations, Kenya and Uganda have reached a significant milestone. Because Unoc has proven its ability to provide petroleum products to Uganda, we can guarantee Ugandans a speedier and more affordable gasoline supply in the future,” Dr. Nankabirwa stated.

Following the agreement that excluded Kenyan firms, Unoc is the only importer and guarantees a steady supply at reasonable fuel rates.

“The fuel will get into the Kenyan pipeline infrastructure and later to Uganda via trucks,” Unoc stated.

Uganda is now able to import oil through the port of Mombasa and store it with the Kenya Pipeline Company (KPC) thanks to agreements the State Oil Agency inked with KPC in May. This came after lengthy negotiations between Kenya and Uganda, which included a legal dispute over Unoc’s exclusive importer status from private oil suppliers who had been supplying Uganda for decades.

“This week, we anticipate the first oil drop to arrive in Uganda. The oil transportation investment will commence at Kipevu terminal 2, which has the capacity to handle multiple vessels simultaneously,” stated the minister of energy.

KPC reports that during the next three days, the fuel should be picked up for forward delivery in Kisumu or Eldoret.

Conversely, Ms. Nabbanja asserted that the strategic move by President Yoweri Museveni to designate Unoc as the exclusive importer of fuel will increase the company’s competitiveness and reduce costs for the end user.

“We have a strong supply partner, and the Sale and Purchase Agreement (SPA) that Ugandan oil marketing companies signed will provide a consistent fuel supply while also benefiting other supply chain participants,” Ms. Nabbanja stated.

Extra gasoline

Speaking in person, Kenya’s Petroleum Principal Secretary Mohamed Liban stated that the arrangement will greatly boost the amount of petroleum handled to various East African regions, as it currently accounts for 40% of all fuel handled in Mombasa port.

At the moment, we manage 20% of the petroleum products that are going to Uganda, 10% that are going to South Sudan, and the same number that is going to Rwanda.

Kenya plans to raise transit fuel to more than that in the upcoming months with the new KOT2 and such agreements, Mr. Liban stated.

Captain William Ruto, managing director of Kenya Ports Authority (KPA), announced plans to boost gasoline throughput to Uganda. He said that any size vessel would be able to be handled and a steady supply of petroleum products will be stored in the new KOT2 and KPC storage facilities.

Capt. Ruto stated, “Our efficiency as a result of our significant infrastructure investment is helping the country to attract more businesses, and this is one of them.”