Uganda Protests $40 Million Fee as it Receives First Direct Oil Imports

Uganda Lobbies Kenya to Lower $40 Million Bond Fee for Oil Imports

Uganda is lobbying Kenya to lower the $40 million (~KShs. 5 billion/UGX 147 billion) bond fee for an undeclared surplus it shipped as it begins direct importation of refined petroleum products through the Kipevu Oil Terminal at the Port of Mombasa.

Following extensive negotiations, Uganda secured the ability to import petroleum products directly through the Uganda National Oil Company (UNOC), bypassing middlemen. UNOC's first consignments arrived at the Port of Mombasa at the start of July, marking a new phase where Kenya earns only a transit fee.

Energy Minister Ruth Nankabirwa has stated that the $40 million fee is excessively high and will result in increased fuel prices for consumers, as Uganda receives 90 percent of its petroleum through the Mombasa route. "I am still in negotiations with the Kenyan government to ensure they don't impose this fee on us. The bond fee at VTTI in Mombasa, where we are storing our products, is a deterrent. This is not in the spirit of the East African Community," Minister Nankabirwa said on Sunday.

In the new market structure, Vitol Bahrain EC acquires fuel for UNOC, ships it to the Port of Mombasa, and discharges it through the Kenya Pipeline Company’s network to Eldoret, Nakuru, and Kisumu. From there, it is trucked across the border and sold to oil marketers.

In late 2023, Uganda threatened to shift its oil supply needs via the Tanga port in Tanzania, prompting Nairobi to accept the direct importation route. However, in May 2024, Kenya refused to lower the fees UNOC must pay for transit, meaning it would be forced to pay $37.83 per cubic meter to use the KPC’s infrastructure.

https://missuperior.com/2024/07/uganda-protests-40-million-fee-as-it-receives-first-direct-oil-imports/