Uganda sues Kenya over oil importation

Ugandan government has sued Kenya over the importation deal of petroleum oil from Mombasa port.

In an application filed at the East African Court of Justice,  Uganda through its Attorney General claims the Kenyan government has restrained EPRA from issuing them with a licence for the importation of oil from Mombasa to Uganda.

In court documents filed on December 28, 2023, Uganda claims they import approximately 90 per cent of its refined Petroleum products through the Port of Mombasa in Kenya and the products are transported to Uganda using the pipeline owned and operated by the Kenyan Pipeline Company Limited (KPC).

The landlocked country says the importation and supply of refined petroleum products into Uganda has traditionally been handled by the Oil Marketing Companies (OMC) operating in Kenya through the Kenya Open Tender System (OTS) and subsequently through the Government-to-Government arrangements between Kenya and foreign Governments, that Kenya adopted in early 2023. 

Under the arrangement, OMCs operating in Kenya import petroleum products and in turn, sell the same products to Uganda's OMCS.

"The complete reliance and dependency on Kenyan OMCs to import and supply petroleum products to Uganda have exposed the Republic of Uganda to supply vulnerabilities resulting in an avoidable increase in fuel pump prices," Uganda states in court documents. 

Further, the Government of Uganda made a policy shift in the manner in which the sourcing, importation and supply of petroleum products for the Ugandan market is to be handled. 

Accordingly, the Applicant through Uganda National Oil Company (UNOC) was empowered by Uganda to be the sole importer and supplier of all the petroleum products, for the Ugandan market.

Consequently, sometime in April 2023, Uganda engaged the Kenyan authorities on the new policy for the sourcing, importation and supply of petroleum products meant for the Ugandan market. 

The Kenyan authorities in line with the Principles and provisions of the Treaty and Protocols made thereunder, assured the Ugandan authorities of Kenya's unwavering support in the implementation of the said policy.

"Upon engagements with the relevant authorities in Kenya, UNOC sought to enter into a Storage and Transportation Agreement with KPC. Consequently, UNOC was required by the Respondent to meet certain regulatory requirements including obtaining an Import, Export and Wholesale of Petroleum Products (except LPG) Licence (hereinafter referred to as "the Licence") from EPRA to utilize the petroleum transit infrastructure in Kenya, especially the Kenya Pipeline systems in furtherance of the new Ugandan policy."

Uganda says it found the requirements an unnecessary hindrance to the implementation of its petroleum policy as the petroleum products in issue were wholly transit goods not destined for Kenya.

EPRA further required UNOC to provide several documents and meet a raft of requirements for EPRA to process and issue it with the Licence. 

The Minister of Energy and Mineral Development, on behalf of UNOC, wrote to the CS Ministry of Energy and Petroleum, Kenya requesting for a waiver of certain requirements for the Licence as the same were not applicable, practical or rational. 

The Cabinet Secretary, Ministry of Energy and Petroleum, Kenya intimated to the Applicant an intention to present to the Kenyan Cabinet the Applicant's request for a waiver of the specific requirements for consideration.

Following the Cabinet's decision, the Cabinet Secretary Ministry of Energy and Petroleum, Kenya requested EPRA to urgently review and align the petroleum import logistic arrangement in light of the policy shift in Uganda.

On November 7, 2023, a Petition was filed in the High Court of Kenya at Machakos while UNOC's reapplication remained undetermined by EPRA for over two weeks after resubmission.

"The High Court of Kenya at Machakos on 7 November 2023 without according the Applicant and/or UNOC a hearing, inter alia, issued conservatory orders restraining EPRA from granting an Import, Export and Wholesale of Petroleum Products (Except LPG) licence to UNOC", the court documents read.

Further, the conservatory orders issued on November 7, 2023, inter- alia restraining EPRA from granting the Licence to UNOC were extended from December 6, 2023, to December 19, 2023, and on December 19, 2023, they were further extended to January 22, 2024. [Attached hereto is a true copy of the Ruling marked as "RMO-S"

Uganda, at all material times, sought the intervention of the Republic of Kenya to restrain its organs of State from infringing the Principles and provisions of the Treaty and Protocols, it adds.

Uganda argues that it is a landlocked Country and has the right, under the Treaty for the Establishment of the East African Community and the United Nations Convention on the Law of the Sea, to which the Republic of Kenya is signatory, of access to and from the sea and freedom of transit through the territory of Kenya by all means of transport.

Uganda wants a declaration that the actions of Kenya complained of above contravene Articles 5(1), (3)(a), (b) and (h):6(b).(d) and (f); 7(1)(a) (b); 8(1)(a) and (c); 23; 27; 28; 76(1); 89(b) and (e); 90(j); 93(c) and (d); and 130 of the Treaty for the Establishment of the East African Community and Articles 3(2), 4(2)(a), 5(1), 18 and 38 of the Protocol

"A declaration that the action of the Republic of Kenya restraining EPRA from issuing the Licence to the Applicant contravenes Articles 5(1), (3)(a), (b) and (h); 6(b) (d) and (f); 7(1) (a), (b); 8(1)(a) and (c); 23; 27, 28; 76(1); 89(b) and (e); 90(1); 93(c) and (d); and 130 of the Treaty for the Establishment of the East African Community and Articles 3(2), 4(2)(a), 5(1), 18 and 38 of the Protocol", Uganda claims.

It also wants a declaration that the action of the Republic of Kenya prohibiting the grant of any waiver of the licencing requirements for the Licence to the Applicant contravenes Articles of the Treaty for the Establishment of the East African Community and Articles 3(2),4(2)(a),5(1) , 18 and 38 of the Protocol.

A permanent injunction was issued against the Republic of Kenya from imposing unrealistic restrictions to UNOC accessing the KPC system.