UNOC Set to Secure Monopoly Permit for Fuel Importation

Unoc is set to get its monopoly permit for direct furl importation soon, Kenyan authorities say.

Kenya Energy Cabinet Secretary Davis Chirchir revealed on Wednesday that significant progress is being made towards issuing a permit that would enable the Uganda National Oil Company (UNOC) to directly import fuel through the Kenya Pipeline Company (KPC).

Chirchir emphasized the collaborative nature of this endeavor, emphasizing the benefits it would bring to both countries. “You will see UNOC obtaining a license, and then we will explore avenues for cooperation because utilizing our pipeline presents an opportunity for us,” Mr. Chirchir stated.

This announcement follows recent developments in a legal dispute filed at the High Court in Machakos aimed at blocking the licensing of UNOC. Sources indicate that the license is likely to be granted next month, potentially resolving the dispute and allowing UNOC to procure fuel from Vitol Bahrain.

Uganda has been pursuing the licensing agreement to utilize KPC’s infrastructure, with the case yet to be determined at the regional court. However, the issuance of the license could potentially resolve the legal proceedings as both countries seek to avoid diplomatic tensions.

UNOC’s plans to directly import fuel from Vitol Bahrain have raised concerns among local oil marketing companies, as UNOC, historically supplying fuel primarily to Ugandan state-owned entities, now intends to cater to private oil marketers.

Kenya had previously initiated a government-backed deal with Gulf majors, including Saudi Aramco, Abu Dhabi National Oil Corporation, and Emirates National Oil Company, to import fuel on a 180-day credit period, aimed at stabilizing the currency and reducing dollar demand.

While UNOC’s entry into Kenya as a direct importer may impact local oil firms, KPC is not expected to suffer revenue losses, as UNOC will continue to utilize its storage facilities and transport network to facilitate fuel transportation to Uganda.

The announcement regarding UNOC’s licensing came shortly after petitioners withdrew a case aimed at blocking the Energy and Petroleum Regulatory Authority (EPRA) from issuing the permit. The case, filed by Royani Energy Limited, Acacia Ridge Construction, and two individuals, was withdrawn on March 22.

UNOC had initially planned to commence direct importation in January but faced delays after failing to obtain a license from EPRA, which cited non-compliance with regulatory requirements, including proving ownership of a licensed petroleum depot and retail stations in Kenya.

In the interim, Uganda had explored alternatives, including seeking access to Tanzanian ports, following Kenya’s denial of UNOC’s access to the port of Mombasa and KPC’s infrastructure.