Rédaction Africa Links 24 with The East African
Published on 2024-01-29 04:48:25
New data shows that Kenya has lost $200 million worth of exports to Uganda, its largest regional market, since October 2023. Experts are warning that the losses will continue to grow due to the escalating fight over petroleum products imports, which puts major oil infrastructure at the risk of underuse.
Uganda recently announced that it was turning to Tanzania for oil imports after facing challenges in having its national oil marketer, Uganda National Oil company (Unoc), registered in Kenya to facilitate imports via the Mombasa port.
Uganda’s Energy Minister Ruth Nankabirwa expressed concern over Kenya’s continuous frustration of the Unoc deal, as it is jeopardizing fuel supply stability in Uganda. She further explained that discussions with the government of Tanzania are underway to explore alternative routes for imports and negotiate tax waivers to facilitate business between the two countries.
Kenya’s President William Ruto had been supportive of Uganda’s move in the past, but continued frustrations have led to uncertainty and potential economic loss for both countries. This dispute also threatens Kenya’s investment of $385 million in the Kipevu Oil Terminal 2 (KOT2) in Mombasa and a $170 million fuel jetty in Kisumu.
The new terminal in Mombasa was developed to enhance the handling of petroleum products and attract more business from other regional countries, while the fuel jetty in Kisumu was constructed to cater to the petroleum products trade. However, due to the ongoing dispute, these crucial infrastructures are at risk of underutilization.
Additionally, Uganda’s suspension of its contract with Kenya has further strained trade relations between the two countries. Uganda is Kenya’s top market for imported oil products, importing about 900 million litres of petroleum products per month through Kenya.
To reduce its reliance on imported oil products, Uganda is looking to build a $4 billion refinery with the help of a Dubai firm. It has also issued a licence to China National Offshore Oil Corporation to produce liquefied petroleum gas at a plant in the Kingfisher development area. These initiatives aim to boost domestic energy production in Uganda and create employment opportunities while reducing the reliance on imported oil products.
