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Kenya to Grant Uganda's National Oil Firm Import License to end interstate oil dispute.

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louis Buyisiwe

Mar 28, 2024

East African energy dynamics

Kenya's decision to license Unoc for direct fuel imports heralds a new era in East African energy cooperation, promising to stabilize regional relations and optimize the use of shared infrastructure. This strategic move not only addresses the immediate logistical and legal challenges but also sets the stage for future collaboration in energy and beyond, reinforcing the bonds of partnership between Kenya and Uganda.

In a significant development aimed at mending frayed diplomatic relations and enhancing regional energy cooperation, Kenya is poised to issue an import license to the Uganda National Oil Company (Unoc).


This move comes after a protracted dispute that escalated to a regional court, impacting diplomatic relations between Kenya and Uganda.


Energy Cabinet Secretary Davis Chirchir announced that the permit, allowing Unoc to import fuel directly via the Kenya Pipeline Company (KPC), is underway. "Unoc's forthcoming license marks a pivotal step in our collaboration, leveraging our pipeline as a mutual opportunity," Chirchir stated, emphasizing the strategic use of KPC's infrastructure without compromising its transporter role.


This development follows the withdrawal of a legal challenge at the High Court in Machakos against Unoc's licensing, signaling a potential resolution next month. The license will enable Unoc to procure fuel from Vitol Bahrain, transitioning to direct imports that could reshape the regional oil landscape.


Also read:Uganda-Tanzania Crude Pipeline Advances with New Coating Facility


The resolution of this licensing issue is expected to conclude the legal battle at the regional court, averting further diplomatic strain. Unoc's direct importation from Vitol Bahrain is anticipated to disrupt the traditional fuel supply chain, impacting the revenues of Kenyan oil marketing firms that have historically serviced Uganda.


Uganda's shift towards direct imports through Unoc, initiated shortly after Kenya's fuel import agreement with Gulf oil giants to support the Kenyan shilling, underscores the evolving dynamics in East African energy trade. Despite potential challenges for local marketers, KPC's infrastructure utilization by Unoc ensures sustained operational revenue for Kenya.


With Uganda importing approximately 2.5 billion liters of petroleum annually, the integration of Unoc into Kenya's oil infrastructure is poised to enhance the efficiency and reliability of fuel supply in the region, fostering stronger economic and diplomatic ties between the two nations.


Kenya's decision to license Unoc for direct fuel imports heralds a new era in East African energy cooperation, promising to stabilize regional relations and optimize the use of shared infrastructure. This strategic move not only addresses the immediate logistical and legal challenges but also sets the stage for future collaboration in energy and beyond, reinforcing the bonds of partnership between Kenya and Uganda.


Other related article:Uganda Expands Fuel Supply Chain, Engages Tanzania Amid Kenya Tensions

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