Uganda Takes Legal Action Against Kenya in Fuel Import Dispute

Uganda has brought a case against Kenya in the East African Court of Justice after Kenya refused to grant a license to Uganda's government-owned oil marketer to operate locally and handle fuel imports bound for Kampala.

The Yoweri Museveni administration's decision to file the case on December 28 highlights the strained diplomatic ties and trade relationship between Uganda and Kenya. Uganda recently sought the intervention of the regional court to pressure Kenya into honouring its commitment, made in April of the previous year, to support Uganda's direct fuel imports beginning this month. Kenya, through the Ministry of Energy and the Energy and Petroleum Regulatory Authority (Epra), imposed a set of conditions that the Uganda National Oil Corporation (Unoc) had to meet to obtain the necessary license.

According to the court documents, the Attorney-General of Uganda claims that Unoc considered these demands to be needless barriers in carrying out its petroleum policy because the petroleum products in question were only meant for transit and not for Kenya. These demands encompassed the need to present proof of annual sales and to possess a licensed petroleum depot and at least five retail stations in Uganda. Unoc was also required to register a branch in Kenya, which they did with reluctance to ensure a seamless execution of Uganda's fuel purchase agreement.

There has been much speculation about the current state of diplomatic relations between Kampala and Nairobi due to their ongoing dispute, which marks the first time these two nations have resorted to the regional court. In light of Kenya's recent decision to enter into a government-supported agreement with three major oil companies from the Gulf, Uganda has chosen to procure fuel directly from Vitol Bahrain, with this arrangement commencing in the present month. While Uganda has engaged in discussions with Tanzania regarding the possibility of utilizing the Port of Dar es Salaam for fuel imports, they remain hopeful that Kenya will grant Unoc the necessary license, as they value the superior network facilitated by the Kenya Pipeline Company (KPC).

“In order to implement the policy (decision by Uganda to directly buy fuel in the global market), it is necessary for the Republic of Uganda, through Unoc, to transport petroleum products through the Republic of Kenya under the infrastructure of KPC,” Uganda’s Attorney-General adds in the court papers.