Uganda and 4 EAC Nations Oppose Kenya’s Oil Deal

Uganda and 4 EAC Nations Oppose Kenya’s Oil Deal

Uganda and 4 EAC Nations Oppose Kenya’s Oil Deal

Following the refusal of landlocked East African nations to import petroleum through Kenya, Kenya is expected to lose billions of shillings in the oil trade.Due to the contentious government-to-government agreement between the Kenyan government and the Gulf countries, which has resulted in a sharp increase in fuel prices, Uganda has already decided to cease importing fuel through Kenya.

Speaking to the BBC, the CEO of a Kenyan oil company disclosed that South Sudan, Burundi, Rwanda, and the Democratic Republic of the Congo were all thinking about doing business with Kenya in the oil sector. The majority of the petroleum products imported by the four countries through Kenya are due to their lack of a seaport.

It has come to light that the countries are unhappy with both the higher fuel costs and Kenya’s government-to-government oil arrangement. Fuel imports via Kenya are now more expensive among EAC countries due to the higher taxes and levies introduced by the Finance Act 2023.

The area has coordinated infrastructure initiatives to control our supremacy and is not dozing off. Kenya will ultimately lose severely, the CEO cautioned. It has options. Should landlocked East African countries decide not to use the Port of Mombasa as the entry point for their petroleum products, Tanzania and Sudan stand to gain the most.

Tanzania will be used by Uganda to maintain its reserves of fuel, as it has already said. Although the ongoing fighting in Sudan has halted trade within the region, there are five important ports there that might replace Mombasa’s Port.

90% of Uganda’s fuel imports previously came from Kenya, with only 10% coming from Tanzania, indicating how much Kenya stands to lose as a result of the contentious oil agreement and unfavorable business environment. Furthermore, 40% of Kenya’s total gasoline imports pass through Uganda primarily on their way to the DRC and South Sudan. Kenya is projected to lose at least Ksh15 billion in income in the event that Uganda and Tanzania reach an agreement about petroleum imports.