Kenya’s Oil Industry Hit Hard: Massive Losses Loom as Uganda Chooses Dar Port Over Local Facilities

“So, we know that the alternative route could be expensive because of the logistics that are involved but we also know that there is a possibility of a negotiation with the government of Tanzania, to waive some taxes so that their sister country can be able to do business.”

Ms. Nankabirwa, as reported by the Daily Monitor, expressed confusion about the source of frustration despite Kenya’s President William Ruto previously showing support for Uganda’s actions on several occasions.

“The president sent me to meet President Ruto four times and he was so supportive on all the times then he sent me, my brother Chirchir [Davis], the Minister of Energy and some [Kenyan] people jumped in court, what do you do if you are sued? You wait for the ruling. So we have been talking and we are continuing to talk but now, we have a time frame because we feel the pump price in Uganda should be lower,” she said.

The decision to suspend a contract with Kenya is jeopardizing a significant investment in Kenya’s Kipevu Oil Terminal 2 (KOT2) in Mombasa and a fuel jetty in Kisumu.

These projects, totaling $555 million, aimed to double the capacity for handling transit petroleum products to Uganda, Rwanda, and Burundi.

KOT2, designed to handle four vessels simultaneously, sought to improve efficiency and attract regional business away from Dar es Salaam.

The Kisumu jetty, operational since January 2023, faced delays due to a corresponding facility in Uganda.

Uganda, Kenya’s top oil product export market, suspended its contract, citing dissatisfaction with a government-to-government fuel import deal.

Uganda now plans to build a $4 billion refinery and has granted a license to China National Offshore Oil Corporation for liquefied petroleum gas production in the Kingfisher development area.

SOURCE: NEWS AGENCIES