Bogus EAC Regional Trade? Standoff At Mombasa Port As Uganda’s Direct Fuel Imports Spark Dispute Over Kenya’s Exorbitant Bond Fees

Bogus EAC Regional Trade? Standoff At Mombasa Port As Uganda’s Direct Fuel Imports Spark Dispute Over Kenya’s Exorbitant Bond Fees

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By Spy Uganda

Mombasa: A standoff has emerged at the Mombasa Port over Uganda’s recent decision to import fuel directly through the Mombasa support system, bypassing traditional Kenyan oil marketers.

Historically, Uganda has relied on Kenyan oil marketers for its fuel imports. However, in November last year, Ugandan President Yoweri Museveni announced that oil imported through Kenya was too expensive and consequently opted to import fuel directly, distancing itself from the government-to-government agreement initially established by Kenya.

Initially, Kenya denied Uganda the license to import oil directly. However, after a legal battle at the East African Court of Justice, a concession was reached and Uganda was granted permission to import fuel directly.

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Last week, Ugandans celebrated the arrival of the first batch of oil directly imported through Mombasa. On July 3, two vessels carrying petroleum products destined for Uganda docked at the Mombasa port, marking the start of a new era of energy independence for Uganda, which has long relied on Kenyan private oil marketers for its fuel supplies. The nation now anticipates lower pump prices as a result of this direct importation.

MTNavig8 Matinez, sailing under the flag of Liberia, docked at Kipevu Oil Terminal 2 (KOT2) carrying about 58,000 metric tonnes (MT) of petrol, while MT Sinbad, laden with about 70,000MT of diesel also docked in Mombasa. A delegation of Uganda government officials led by Energy and Mineral Development Minister Ruth Nankabirwa, received the historic consignment.

However, the celebration was short-lived as the Ugandan government began protesting against the increased bond fees imposed by Kenya. Kenya charged Uganda 5.7 billion Kenyan Shillings in bond fees, a significant increase from the previous 1.9 billion Kenyan Shillings which could create tensions and complicate trade relations between the two countries.

The higher fees are perceived as a measure to prevent the cheaper Ugandan fuel from being sold in Kenya. Under the previous arrangement, Kenya earned 180 million dollars through its oil companies importing fuel to Uganda. The loss of this revenue threatens to reduce Kenya’s foreign exchange earnings, potentially weakening the Kenyan Shilling and causing inflation.

The standoff at Mombasa Port highlights the complexities of regional trade and the need for effective conflict resolution mechanisms to ensure mutual economic benefits and stable relations between neighbouring countries.

According to sources, Nankabirwa and Kenyan officials including Kenyan Cabinet Secretary Davis Chirchir are currently in negotiations to address the matter and seeking a way forward to resolve the dispute.

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