Tanzania, Kenya Fight For Lucrative Uganda Petroleum Trade

The rising political temperatures in Kenya over the Uhuru Kenyatta succession are likely to take a toll on the country’s trade with its East and Central African partners, with importers and transporters on the Northern Corridor already exploring new routes for their cargo.

Just this week, Uganda began a trial delivery of petroleum products from the Dar es Salaam port through Lake Victoria, after a 16-year break.

This move spells doom to the Port of Mombasa, which accounts for three-quarters of the transit cargo headed for Uganda.

Uganda, South Sudan, Rwanda, Burundi and the Democratic Republic of Congo (DRC) import a huge percentage of their petroleum products using trucks through Kenya. Refined petroleum, which forms 13 per cent of Kenya’s total exports, is the country’s third-largest export after tea and cut flowers.

Uganda Railways Corporation took 500,000 litres of petroleum products across Lake Victoria from Tanzania. The fuel had landed in Dar es Salaam and was transported by train to the Mwanza port, then to Uganda through the lake.

Now, with Kampala looking to Dar, the potential loss of the lucrative petroleum transhipment business has jolted officials in Nairobi, according to sources. Kenya invested $400 million in the rehabilitation of its oil pipeline network from Mombasa to Eldoret, and holding facilities in Eldoret. It also constructed a $170 million fuel jetty in Kisumu in anticipation of transferring part of the fuel via Lake Victoria.

While some state officials have put on a brave face, the chipping away of business is likely to increase as the country enters full electioneering mode in the coming months.

The General Election is slated for August 2022 and the battle lines are already drawn.

The falling-out between President Kenyatta and his deputy Dr William Ruto is causing jitters and a bare-knuckle duel is shaping up between the two estranged politicians, who were elected on the same ticket in the elections in 2013 and 2017.

On Thursday, Dr Ruto drew the first blood when his party United Democratic Alliance won its first parliamentary seat in a high-stakes by-election in Kenyatta’s backyard in Kiambu County.

The developments in Kenya have brought back memories of the 2007/08 political crisis after a contested presidential election result when operations in part of the transport corridor stretching from the Mombasa port city to the Great Lakes were paralysed by post-election violence.

Both Kenyatta and Dr Ruto were charged with crimes against humanity at the International Criminal Court in The Hague, but the charges were dropped largely due to lack of evidence and alleged witness tampering.

Transport companies from Uganda and Rwanda were awarded Ksh12.3 billion ($113 million) for losses incurred in the violence. Intraspeed Logistics Ltd, Kampala City Traders Association, Willex Uganda Ltd, KPI Ltd, Katraco Uganda Ltd, Dooba Enterprises, Sebco Uganda, Bunyonyi Safaris, Seven Hills Impex, Uganda Agricultural Tools, Mugenga Holdings, Board City Company and Bidco Uganda Ltd lost vehicles and goods.

Kenyan High Court judge Msagha Mbogholi awarded them Ksh6.3 billion ($58 million)as compensation for loss of business and special damages, and another Ksh6 billion ($55 million)as interest on the principal amount. They are yet to be paid by the Kenyan government.