Abill has been proposed in Uganda that seeks to cut oil ties with Kenya. Uganda’s Ministry of Energy and Mineral issued the proposal citing concerns about occasional supply vulnerabilities and rising pump prices due to its dependence on Kenya.
The ministry notes that Uganda’s reliance on Kenya has led to relatively costly petroleum products, which ultimately affects retail pump prices. By taking control of its petroleum product imports, Uganda aims to have more control over pricing and supply stability.
Uganda’s decision to reduce reliance on Kenya is also partly driven by Kenya’s government-to-government importation deal with the United Arab Emirates (UAE) and Saudi Arabia. This deal might have implications for the availability and pricing of petroleum products in the region.
Independence
The bill has been approved by the Cabinet and is now awaiting approval from the Ugandan Parliament. If it becomes a law, UNOC will be granted the mandate to source and supply petroleum products for the Ugandan market. This move is intended to centralize control over the importation and distribution of petroleum products.
Uganda is actively engaging with the Government of Kenya to ensure a smooth transition and implementation of the policy change. Both countries have expressed a commitment to regional stability and economic growth.
Currently, Uganda imports over 90% of its petroleum products through the Port of Mombasa in Kenya, with the rest coming through the Dar es Salaam port in Tanzania. Licensed Ugandan Oil Marketing Companies (OMCs) are responsible for the importation, but they use the importation structures in Kenya and Tanzania.
Uganda plans to maintain buffer stocks in the country and may call upon Tanzania in the event of supply disruptions. This strategy is aimed at ensuring a more secure and stable supply of petroleum products.