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Uganda has dragged Kenya to the East African Court of Justice seeking a declaration that its action of prohibiting the Energy and Petroleum Regulatory Authority (EPRA) from issuing a petroleum import licence to Uganda National Oil Company (UNOC) is illegal. 

Uganda Attorney General Kiryowa Kiwanuka argues that reliance and dependence on Kenyan oil marketing companies to import and supply petroleum products to Uganda has exposed Uganda to supply vulnerabilities resulting in avoidable increases in fuel pump prices. 

Kiwanuka filed a statement of reference against the Attorney General of Kenya, in the East African Court of Justice holden at Arusha, Tanzania on December 28, 2023. 

Arguments

He states that Uganda currently imports approximately 90% of its refined petroleum products through the port of Mombasa in Kenya, which products are transported to Uganda using the pipeline owned and operated by the state-owned Kenyan Pipeline Company Ltd. 

According to Kiwanuka, the importation and supply of refined petroleum products into Uganda has traditionally been handled by oil marketing companies operating in Kenya through the Kenya open tender system and subsequently through the government-to-government arrangement between Kenya and foreign governments, which Kenya adopted in early 2003. 

Court documents indicate that under the arrangement, the oil marketing companies operating in Kenya import petroleum products and in turn sell them to Uganda’s oil marketing companies. 

Kiwanuka says Uganda, therefore, 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, Uganda, through UNOC, a state corporation, wholly owned by the Uganda Government, which is established under section 42 of the Uganda Petroleum Exploration Development and Production Act, 2013, was empowered to be the sole importer and supplier of all petroleum products for the Ugandan market.  

The Attorney General says to implement the policy, it is necessary for Uganda, through UNOC, to transport petroleum products from Kenya to Uganda under the infrastructure of the Kenya Pipeline Company (KPC). 

Uganda engages Kenyan authorities

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

Kiwanuka states that the Kenyan authorities in line with the principles and provisions of the treaty and protocols made thereunder ensured Ugandan authorities of Kenya’s unwavering support in the implementation of the said policy. 

“Upon the engagements with the relevant authorities in Kenya, UNOC sought to enter into a storage and transportation agreement with KPC. Consequently, UNOC was required by Kenya to meet certain regulatory requirements including obtaining import, export, and wholesale of petroleum products except Liquefied Petroleum Gas (LPG) licence from EPRA to utilise petroleum transit infrastructure in Kenya, especially the Kenyan pipeline system in furtherance of the new Ugandan policy regulatory requirement,” Kiwanuka contends. 

The regulatory requirements, according to Kiwanuka, included the incorporation of a subsidiary or registration of UNOC as a company or a branch in Kenya and applying for an import, export and wholesale of petroleum products (except LPG) licence.   

 “Uganda found that the above requirements are unnecessary and a hindrance to the implementation of its petroleum policy as the petroleum products in issue were wholly transit goods not destined for Kenya,” the Attorney General argues. 

Breach of contract

In protest, UNOC reportedly registered a breach of contract in Kenya with the sole purpose of processing the license to fulfil its mandate under the revised policy to import all petroleum products for Uganda. 

According to the suit, EPRA further required UNOC to provide several documents and meet a raft of requirements for the Kenyan petroleum regulator to process and issue it with a licence. 

UNOC required to prove oil sales of over six million litres

The requirements included a certificate of incorporation, identification documents for all directors and work permits, and proof of financial capability. 

“UNOC, while objecting to the applicability of the same, processed the foregoing arrangement for the licence including registration of a branch, securing a personal identification number for the branch and the single business permit and submitted an online application for the licence on September 6, 2023,” Kiwanuka argues. 

Documents show that EPRA considered UNOC’s application through an email dated September 30, 2023, but rejected it on account of the applicant not having provided proof of annual sales of 6.6 million litres, ownership of five licensed retail petrol stations and ownership of a licensed petroleum depot. 

Request for waiver

Subsequently, Uganda’s energy ministry on behalf of UNOC wrote to the Kenyan energy ministry requesting for a waiver of certain requirements for the license, arguing that they were not applicable, practical or rational as the petroleum products in issue are goods in transit destined for Uganda. 

The Kenyan energy ministry cabinet secretary intimated to Uganda’s energy ministry of an intention to present their request to the Kenyan cabinet for consideration. 

“Following the cabinet’s decision, the Kenyan energy ministry cabinet secretary requested EPRA to urgently review and align the petroleum import logistics arrangement in light of the policy shift in Uganda,” court documents state. 

As a result, UNOC re-submitted its application as directed by the Kenyan energy ministry cabinet secretary to EPRA for reconsideration on October 19, 2023. 

Petition filed in Machakos

However, on November 7, 2023, a petition was filed in the High Court of Kenya at Machakos while UNOC’s re-application remained undermined by EPRA for over two weeks after re-submission. 

Uganda hired two top legal firms in Kenya and Uganda, to defend the petroleum deal. However, the Kenya  High Court on the same date (November 7) without according UNOC a hearing, issued conservatory orders restraining EPRA from granting an import, export and wholesale of petroleum products (except LPG) licence to UNOC. 

According to Kiwanuka, Uganda at all material times sought the intervention of the Kenyan government to restrain its organs from infringing the principles and provisions and protocols of the East African Community (EAC) treaty. 

“Uganda is a landlocked country and has the right under the treaty for the establishment of the EAC and the United Nations Convention of the law of the sea, to which Kenya is a signatory,” he states. 

Prayers 

The Attorney General seeks a court declaration that the actions of Kenya complained of above contravene several articles in the treaty for the establishment of EAC. 
Kiwanuka also wants the EAC court to declare that the action of Kenya restraining EPRA from issuing a licence to UNOC contravenes the treaty for establishment of the EAC. 

He further seeks a declaration that Uganda does not require a licence from EPRA to access the Kenya Pipeline Company system to transport petroleum products from the Port of Mombasa to Uganda. 

In addition, the Attorney General seeks a declaration that Kenya unconditionally accords to UNOC commercial terms for use of the Kenyan pipeline system the same way it accords them to service suppliers of other partner states or any third party. 

He wants court to issue an order restraining Kenya from imposing unrealistic restrictions to UNOC in accessing the Kenyan Pipeline Company system.     

Kiwanuka comments

Commenting about the suit on December 28, 2023, Kiwanuka said they sued because Kenya is putting a condition on access to the sea, yet under the EAC treaty warrants free access to the sea by all member states. 

The East African Court of Justice directed the Kenyan Government to file its defence in relation to the suit within 45 days from the day of service of the summons, lest the case will be heard and determined in their absence.