The Ugandan government has also rejected President William Ruto’s contentious oil contract with Saudi Arabia and the UAE.
This comes after it swore never to import petroleum from Kenya as a result of Ruto’s contentious oil contract.
Uganda’s Cabinet has authorized a bill that will be introduced in the country’s National Assembly to reduce the country’s reliance on Kenya for petroleum imports.
The Uganda National Oil Company (UNOC) will be tasked with procuring and importing petroleum products for the country’s oil marketing companies (OMCs) under the proposed bill.
Uganda, according to a statement issued by the country’s Energy Minister Ruth Nankabirwa Ssentamu, has encountered exorbitant pump prices and supply issues in recent months as a result of Kenya’s government-to-government oil arrangement with Saudi and United Arab Emirates (UAE) enterprises.
“Despite the price-competitive nature of the Open Tender System in Kenya and its relatively normal supplies, it exposed Uganda to occasional supply vulnerabilities where the Ugandan OMCs were considered secondary whenever there were supply disruptions,” he said.
“These vulnerabilities paused additional challenges, resulting in Uganda receiving relatively costly products and ultimately impacting the retail pump prices.”
According to the ministry, Uganda imports 90% of its petroleum products through Mombasa Port, with the remainder arriving through Dar es Salaam.
Kenyan OMCs supply the fuel sold in Uganda to their affiliates in the neighboring country. The government has now requested that UNOC source the products and supply them to local OMCs.
This would be a setback for Kenyan OMCs with Ugandan outlets, as they would be required to enter into a separate import agreement with UNOC.
UNOC has also signed into an agreement with Vitol Bahrain E.C. to assist in the sourcing and importation of oil for the East African country.
The Bahraini corporation would keep reserves in Uganda and Tanzania, reducing the flow of products through Kenya even further.