Uganda’s President Yoweri Museveni seems to be working out of persistence within the quest for a port of name for the nation’s petroleum imports, after political and authorized setbacks in Kenya annoyed Kampala’s efforts to use the port of Mombasa and its oil-related infrastructure.
The Ugandan chief has now gone full throttle on plans to make the port of Dar es Salaam another by means of which to ship gasoline to his landlocked nation, with sources in Nairobi indicating that the sooner initiated talks have hit a brick wall.
Uganda is, due to this fact, a second month with out actualising its multimillion-dollar gasoline importation deal between state-owned Uganda National Oil Company (Unoc) and Swiss commodity and buying and selling large Vitol to provide petroleum merchandise to at the very least 170 oil advertising and marketing corporations in Uganda.
This week, a technical workforce was dispatched to Tanzania — the second journey in three weeks — to negotiate the finer particulars within the delicate petroleum importation deal by means of Dar es Salaam that Tanzania President Samia Suluhu Hassan supplied to doubtlessly beat the Mombasa Port as the popular route.
According to sources aware of the matter, the discussions are led by envoys appointed by Presidents Museveni and Samia. The Ugandan envoy met with President Samia first to current “the urgency of the issue that can’t rely on vested interests in Kenya.”
Energy Minister Ruth Nankabirwa instructed The EastAfrican this week that it was too early to set up the timelines when Unoc can get the inexperienced mild to land the primary gasoline cargo in Dar es Salaam, including that “everything is still under negotiation.”
Technical groups from Kampala and the Tanzanian business capital are thrashing out particulars on tax waivers that Tanzania has proposed to supply, the volumes to be shipped, and the mode of transport.
“There has been one meeting already in Tanzania. The technical team is right now preparing to travel to Tanzania for a second meeting,” she mentioned, expressing frustration concerning the setbacks in Kenya, which have left Uganda with no selection however to pursue different routes so long as they may “ensure security of supply.”
Although Ms Nankabirwa was cagey about how a lot gasoline Kampala plans to usher in by means of Dar es Salaam, it’s understood that one of many points on the negotiation desk is to import about two billion litres of petroleum merchandise by means of Tanzania, which is about 80 % Uganda’s consumption.
This, specialists say, is a shift from the plan on the outset final yr, when the federal government pushed for the larger share of imports to come by means of Mombasa, as Dar es Salaam was riddled with a number of infrastructure challenges, together with the dearth of a refined merchandise oil pipeline and an environment friendly railway transport system.
“The volumes we import through Tanzania will depend on the [tax] waivers they offer. We cannot talk about volumes now. We are still negotiating,” Ms Nankabirwa instructed The EastAfrican.
With the larger share of Kampala-bound petroleum merchandise coming by means of Tanzania, this is able to swell Uganda’s cargo site visitors by means of the Dar es Salaam port, which at the moment stands at solely two % of the power’s throughput, in accordance to Tanzania Ports Authority (TPA).
Although nonetheless beneath dialogue, all indications are that Dar es Salaam is providing a greater deal, in step with the incentives and provides it has been giving its new clients, together with a 30-day free storage for Ugandan shippers for all imports, and a devoted items shed on the port, which can be utilized as a consolidation and deconsolidation centre any time, TPA deputy director-general Juma Kijavara, mentioned final week.
By contract, Mombasa port provides solely 15-days free storage.
The different discussions contact on challenges alongside the Central Corridor and necessities that want to be in place to facilitate easy supply of imports to Uganda, to be labored out by the federal government of Tanzania on how to optimise infrastructure there.
According to the Ministry of Energy knowledge, Uganda predominantly imports its petroleum — over 90 % — by means of Mombasa, supplemented by imports by way of Dar es Salaam. Last yr, the nation’s petroleum consumption reached 2.5 billion litres, with a $2 billion import invoice.
Mid final yr, Uganda’s Cabinet accepted a plan that mandated Unoc to instantly import gasoline into the nation, with a view to decreasing inefficiencies and cast off what President Museveni described as preparations in Kenya that had been designed to cheat Uganda-based oil corporations, main to excessive pump costs available in the market.
President Museveni mentioned for a very long time, officers in his authorities colluded with cartels in Kenya that bought from refineries within the Middle East beneath the Open Tender System and, even when Kenya ditched OTS and switched to a government-to-government (G2G) association with the United Arab Emirates in March 2023, the gasoline nonetheless got here at excessive premiums and was priced out of Ugandans’ attain.
Dicksons Kateshumbwa, a legislator and former commissioner for Customs at Uganda Revenue Authority, mentioned beneath the G2G system, Gulf refineries provide all gasoline to international locations within the area — together with Uganda — at premiums of $118 per metric tonne for Automotive Gas Oil and $97.5 per metric tonne for Premium Motor Spirit as opposed to $35 per MT beneath the OTS.
Kenya negotiated a six-month credit score interval during which it could get oil and pay the Gulf corporations after provide, however compelled Ugandan OMCs to pay upfront for petroleum merchandise to cushion Kenya’s foreign exchange crunch.
Uganda amended its Petroleum Supply Act to hand Unoc the powers to associate with Vitol and import instantly from the Gulf refineries, and the state-owned agency was set to start the importation in January 2024 however, due to a lawsuit difficult its software for a licence to transport gasoline merchandise in Kenya, this was not achieved.
On December 28, 2023, Uganda escalated the dispute to the East Africa Court of Justice, the place a ruling is pending, whereas for the case in Kenya difficult Unoc’s software to run gasoline logistics enterprise, a courtroom case in Machakos, on January 22, 2024 deferred its ruling to February 12.
However, the Uganda authorities drafted a regulation that might create a sole provider of all OMCs, knocking out Kenya’s push to keep its dominance of gasoline provide, and authorities in Kampala can not decide how quickly the falling-out over this deal will be resolved to permit Unoc to begin importing gasoline by way of Mombasa.
According to Ms Nankabirwa, Kenya’s President William Ruto was in full help of Uganda’s transfer to import petroleum merchandise from supply, till the nation’s financial pursuits grew to become threatened on the expense of regional cooperation.
“I don’t know where all this frustration is coming from,” Ms Nankabirwa instructed journalists in Kampala.
“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 [Petroleum minister Davis] Chirchir, and then some people jumped in court. What do you do if you are sued?”
Meanwhile, the communication channels between Kampala and Nairobi have have collapsed. Sources say that President Ruto is on the lookout for a high-profile envoy to take a message to Museveni. But the Ugandan chief is determined to salvage his Unoc-Vitol deal, so he could not reverse his choice.
