Uganda has officially started shipping oil products through Tanzania’s Port of Dar es Salaam, ending its reliance on Kenya’s Port of Mombasa and the Kenya Pipeline Company (KPC) for transportation.
According to a statement by Proscovia Nabbanja, CEO of the Uganda National Oil Company (UNOC), the company plans to transport approximately 36 million liters of oil per month, equivalent to 1,028 truckloads, through the Port of Dar es Salaam. The first shipment of 18 million liters, or 520 truckloads, has already begun loading in Dar es Salaam and is expected to arrive in Kampala in the coming days.
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This decision follows a bilateral agreement between Uganda and Tanzania, signed during the Second Business Forum held in Dar es Salaam from May 24 to May 25, 2024. The agreement aims to enhance oil and product transportation routes through Dar es Salaam, citing technical and cost issues associated with using the Mombasa port.
Tanzania’s Deputy Prime Minister and Minister of Energy, Dr. Doto Biteko, emphasized the importance of strengthening economic relations between the two countries, particularly in the energy and industrial sectors. “This meeting aimed to enhance infrastructure and foster cooperation in trade and industry,” Dr. Biteko said.
Uganda’s move to diversify its oil imports comes after concerns over supply disruptions and high fuel prices. President Museveni had expressed dissatisfaction with the current system, where Ugandan fuel companies acquire 90 percent of their supplies through affiliated firms in Kenya. In response, Uganda announced plans to transfer exclusive rights for petroleum supply to a unit of global energy trader Vitol in November 2023.
The country imported approximately $1.6 billion worth of petroleum products in 2022, mostly from the Gulf region. However, Uganda’s efforts to continue imports through Kenya were met with refusal from the Kenyan government to grant the necessary license, prompting the search for alternative routes.
Energy Minister Ruth Nankabirwa stated earlier this year, “We are negotiating with the Tanzanian government, and I will meet with Her Excellency, the President, on this matter. We want to find a route that ensures the security of our petroleum supplies.”
With this new agreement in place, Uganda aims to reduce its reliance on Kenya for oil imports and ensure a more secure and cost-effective supply chain through Tanzania.
