Uganda Faces Hurdles Over Extra Diesel Cargo in Mombasa

Uganda's effort to supply low-cost fuel hit a snag as the country faced unexpected bond fees from Kenya. On July 2, the first batch of petroleum products for the Uganda National Oil Company (Unoc) arrived in Mombasa, only to be met with a $40 million bond fee bill from the Kenya Revenue Authority (KRA), an increase of $25 million due to an extra 17,000 cubic meters of undeclared diesel.

Conflicting figures from Ugandan officials before the shipment raised suspicions of smuggling among Kenyan authorities. Shipping documents indicated that Unoc’s cargo exceeded the declared amount, prompting immediate action from Kenya's Cabinet Secretary for Energy, Davis Chirchir.

Unoc’s chief corporate affairs officer, Tony Otoa, insisted that the cargo, amounting to 80,000MT, was fully declared. However, a letter from Vitol, Unoc’s import partner, showed a request to KRA to allow in higher volumes than declared, which was rejected.

Uganda's Energy Minister, Ruth Nankabirwa, traveled to Kenya twice in four days to negotiate the bond fees, resulting in no changes. Nankabirwa clarified that her trip aimed to thank President William Ruto and discuss future fuel import collaborations, despite earlier statements about the bond fees.

Unoc explained that increased orders from oil firms exceeded Uganda's allocated import volume at a planning meeting in May. The Kenya Pipeline Company (KPC) system was supposed to prioritize G-2-G transit diesel deliveries alongside Unoc’s first 650,000MT shipment.

The ongoing issue has left Ugandan oil marketing companies uncertain about future pump prices, as they await the arrival of Unoc’s products to assess the impact on costs. The increased bond fees and volume discrepancies have complicated Uganda’s fuel import plans, posing challenges to its bid for low-cost fuel supplies.