Uganda is once again thrust into the throes of logistical chaos and economic sabotage, thanks to Kenya’s blatant manipulation and the insidious greed of its private terminal operators. The recent debacle surrounding the importation of fuel by the Uganda National Oil Company (UNOC) from the Port of Mombasa has unveiled an unforgivable betrayal, masked under the guise of commercial regulations and statutory taxes. This situation reeks of corruption, inefficiency, and deliberate obstruction aimed at crippling Uganda’s fledgling oil import system.
Uganda’s Energy and Mineral Resources Minister, Ruth Nankabirwa, has found herself at the centre of a maelstrom, battling not only Kenya’s deceitful bureaucrats but also the oppressive economic stranglehold imposed by private terminal operators like VTTI. The Minister’s accusations that Kenya’s Energy Cabinet Secretary Davis Chirchir ordered the Kenya Revenue Authority (KRA) to impose a bond premium on Uganda’s oil cargo were swiftly dismissed as illogical by Kenyan officials. Yet, the evidence suggests otherwise.
A top official from Kenya’s Ministry of Energy had the audacity to claim that the cabinet secretary lacks the power to impose such fees and instead pointed fingers at Uganda, alleging undeclared consignments of diesel. This hypocritical stance is laughable. Kenya’s assertions are nothing but a smokescreen to deflect from their own culpability. The KRA, hiding behind the East Africa Customs Management Coordination Act, has used it as a cudgel to inflict financial harm on Uganda, all while pretending to adhere to statutory guidelines.
The reality is stark and troubling: VTTI, a private terminal, controls its tariffs with impunity, beyond the reach of government intervention. This terminal, handling Uganda’s oil consignment, has become a den of exploitation, charging extortionate rates that bleed Uganda dry. VTTI’s arbitrary tariff hikes and the additional charges levied for excess diesel imports have shattered any illusions of a fair and transparent process. The terminal’s acknowledgement of receiving volumes above the KRA-approved levels is a damning indictment of their complicity in this economic mugging.
Uganda’s importation requirements of approximately 60,000 tonnes necessitate the use of smaller vessels, driving up freight costs. This logistical reality, exploited by Kenya and its cronies, has led to a projected 30% increase in pump prices in Kampala. The very essence of the deal, which aimed to bypass middlemen and ensure affordable fuel for Ugandan consumers, has been perverted into a financial quagmire. The promise of reduced fuel prices has morphed into a cruel joke, with Ugandans bearing the brunt of skyrocketing costs.
Kenya’s narrative that the bond fee increase is solely due to the excess consignment is a blatant fabrication. This justification is a thinly veiled attempt to mask their predatory practices. The additional levies imposed on Uganda’s inaugural government-to-government oil consignment have sown chaos in the market, driving up costs and creating inefficiencies that directly impact Ugandan consumers. The shift from the previous arrangement, where Ugandan marketers managed finances with precision, to the current nightmare, has introduced financial burdens and logistical complexities that are nothing short of catastrophic.
Before this fiasco, Uganda received eight cargoes monthly, efficiently managing its share of 22% per cargo. This system allowed for timely cash recycling, ensuring a stable supply chain. Now, under the new dispensation, Uganda must import its entire monthly requirement in one go, a move that demands separate cargoes for diesel and super. This change has placed an untenable financial strain on Ugandan importers, who now face increased financing costs and logistical nightmares. Products arriving in Mombasa must be stored or wait offshore, incurring exorbitant storage costs or demurrage charges, as Kenya prioritises its own products through the multi-product pipeline.
This shift is a calculated move by Kenya to undermine Uganda’s oil supply chain, driving up costs and creating a logistical bottleneck that benefits no one but Kenyan profiteers. The cost of fuel imported from the Emirates National Oil Company, initially priced at $65 per barrel, escalates to at least $80 after shipping and overheads, compared to the $90 all-inclusive cost of Kenya’s government-to-government agreements. The irony is palpable: Uganda, seeking to cut costs and improve efficiency, finds itself shackled by Kenya’s Machiavellian tactics.
The involvement of Vital Bahrain EC in acquiring fuel for UNOC has done little to alleviate the situation. The convoluted process of shipping fuel to Mombasa, discharging it through the Kenya Pipeline Company’s network, and then trucking it across the border to Uganda is a logistical nightmare that has only served to inflate costs. The spectre of Uganda paying $37.83 per cubic meter to use the KPC’s infrastructure looms large, threatening to push up pump prices in the landlocked nation by 30%, despite a global drop in oil prices.
In late 2023, Uganda’s threat to shift its oil supply needs via the Tanga port in Tanzania forced Nairobi to momentarily relent and accept the direct importation route. However, this temporary concession has proven to be a pyrrhic victory, as Kenya’s relentless pursuit of economic dominance over Uganda has only intensified. The current market structure, marred by inefficiencies and financial burdens, is a testament to Kenya’s relentless ambition to cripple Uganda’s oil aspirations.
The Kenyan government’s actions are not only a betrayal of regional cooperation but also a stark reminder of the predatory nature of economic interactions within East Africa. Uganda’s plight is a cautionary tale for other nations seeking to navigate the treacherous waters of regional trade. The facade of mutual benefit and cooperation has been shattered, revealing a ruthless pursuit of profit at the expense of a neighbour’s economic stability.
Kenya’s machinations in the fuel importation deal have plunged Uganda into an economic abyss. The rise in pump prices, logistical bottlenecks, and financial strain are the direct results of Kenya’s treacherous actions. The dream of affordable fuel for Ugandans has turned into a nightmare of spiralling costs and inefficiencies. As Uganda grapples with this crisis, it is clear that Kenya’s betrayal will not be forgotten. The scars of this economic onslaught will linger, serving as a grim reminder of the ruthless nature of regional politics.
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