Uganda has finally initiated talks with Tanzania to import fuel through the Port of Tanga instead of the traditional Port of Mombasa, escalating tensions after a disagreement with Nairobi.
In response to Kenya’s refusal to grant concessions for the use of its pipeline, Uganda initially considered the Port of Dar es Salaam.
However, the 1,715.6km road distance from Dar es Salaam to Kampala, compared to the 1,147.6km from Mombasa, raised concerns about increased costs.
The shorter Mombasa route saves Uganda up to $35 per cubic meter, making it a more economical and efficient choice.
Despite initial skepticism among Kenyan State officials and oil executives, recent revelations confirm ongoing talks between Uganda and Tanzania to utilize the Port of Tanga, which is significantly closer to Kampala.
While Tanga may not match the size of Dar es Salaam and Mombasa ports, recent capacity improvements position it as a viable option.
Industry insiders indicate a shift in Uganda’s seriousness, dispelling earlier notions that the talks were a negotiation tactic.
If successful, this move could impact Kenyan oil companies, with the Petroleum Outlets Association of Kenya (Poak) expressing concern over potential market loss.
Poak Chairman Martin Chomba warns that local oil companies, especially small dealers reliant on the transit market, may face closures, posing a threat to Kenya’s foreign exchange earnings.
Approximately a third of fuel imported into Kenya serves the transit market, translating to around 200 million liters monthly.
The Kenyan Pipeline Company (KPC) would also bear the brunt, losing significant revenue from depot tariffs without the transit market share.
This development follows Uganda’s decision to designate the State-owned Uganda National Oil Company (Unoc) as its sole fuel importer, leading to a legal dispute with Kenya at the East African Court of Justice (EACJ).
By xamse
February 26, 2024
