Uganda has taken Kenya to the East African Court of Justice, seeking a declaration that Kenya’s prohibition of the Energy and Petroleum Regulatory Authority (EPRA) from issuing a petroleum import license to Uganda National Oil Company (UNOC) is illegal. The move stems from Uganda’s concerns about supply vulnerabilities and rising fuel prices due to reliance on Kenyan oil marketing companies for petroleum imports.
Attorney General Kiryowa Kiwanuka, representing Uganda, filed a statement of reference against the Kenyan Attorney General in the East African Court of Justice in Arusha, Tanzania, on December 28, 2023.
Supply Vulnerabilities and Policy Shift
Kiwanuka argues that Uganda’s dependence on Kenyan oil marketing companies, responsible for about 90% of Uganda’s refined petroleum product imports, exposes the country to supply vulnerabilities. This dependency has led to an avoidable increase in fuel prices at the pump.
Uganda, through UNOC, sought to change its approach to sourcing, importing, and supplying petroleum products for its market. UNOC, a state corporation fully owned by the Ugandan government, was designated as the sole importer and supplier of all petroleum products for Uganda.
To implement this policy, Uganda intended to transport petroleum products from Kenya to Uganda using the infrastructure of the Kenyan Pipeline Company (KPC).
Engaging Kenyan Authorities and Regulatory Hurdles
In April 2023, Uganda engaged Kenyan authorities to discuss the new policy. Kiwanuka states that the Kenyan authorities assured Uganda of their support in implementing the policy. However, Kenya imposed regulatory requirements on UNOC, including obtaining an import, export, and wholesale license from EPRA.
UNOC, objecting to these requirements as unnecessary hindrances, registered a breach of contract in Kenya to process the license needed to fulfill its mandate under the revised policy.
Rejected License and Diplomatic Interventions
EPRA rejected UNOC’s license application, demanding proof of annual sales, ownership of retail petrol stations, and a licensed petroleum depot. In response, Uganda’s energy ministry requested a waiver of certain requirements, arguing that they were not applicable to goods in transit destined for Uganda.
Despite Uganda’s efforts, the Kenyan High Court issued conservatory orders restraining EPRA from granting a license to UNOC, prompting Uganda to seek diplomatic interventions.
Legal Action and Court Prayers
On December 28, 2023, Uganda filed a suit in the East African Court of Justice, seeking a declaration that Kenya’s actions contravene the East African Community (EAC) treaty. The Attorney General aims to challenge the legality of Kenya’s actions, emphasizing Uganda’s rights as a landlocked country with access to the sea under the EAC treaty and the United Nations Convention of the Law of the Sea.
The prayers of the Attorney General include seeking court declarations against Kenya’s actions, restraining Kenya from imposing unrealistic restrictions on UNOC, and ensuring commercial terms for UNOC’s use of the Kenyan pipeline system.
Looking Forward
The East African Court of Justice has directed the Kenyan Government to file its defense within 45 days. The outcome of this legal battle will not only determine the future of Uganda’s petroleum imports but also set a precedent for regional cooperation within the East African Community.
