The Ugandan government has sued Kenya on the recent stalemate over the importation deal of petroleum oil from Mombasa port.
This after Kenya declined a request to have Uganda National Oil Company (UNOC) register as an oil marketing company locally to use Kenya Pipeline Company (KPC)'s network for handling and transporting fuel headed to Uganda.
In an application filed at the East African Court of Justice, Uganda through its Attorney General accuses the Kenyan government of placing unrealistic restrictions to access Kenya's pipeline system to transport its petroleum products from the Port of Mombasa.
Uganda also accuses Kenya of breaching various articles establishing the EAC Treaty and the Protocol for the Establishment of the East African Community Common Market.
The landlocked country says in reference to the EAC that it does not require a license from the Energy and Petroleum Regulatory Authority (EPRA) to access the KPC system to transport petroleum products.
The neighbouring country further accused the Kenyan Attorney General of restraining the Energy and Petroleum Regulatory Authority (EPRA) from issuing Uganda National Oil Company (UNOC) with a licence for the importation of oil from Mombasa to Uganda.
Uganda's plea
The country seeks several declarations including that restrictions placed by EPRA and a court order obtained from the High Court in Kenya, late last year, blocking the regulator from issuing the license to UNOC, contravene articles establishing the EAC Treaty.
"A declaration that the Republic of Kenya shall accord unconditionally, to UNOC, a service supplier of the Republic of Uganda commercial terms for the use of the Kenya Pipeline Company system no less favourable than it accords to like service suppliers of other partner State or any third party,” the reference stated.
The neighbouring country also wants a declaration that the action of the Republic of Kenya prohibiting the grant of any waiver of the licencing requirements for the Licence to it contravenes Articles of the Treaty for the Establishment of the East African Community and Articles 3(2),4(2)(a),5(1), 18 and 38 of the Protocol.
"We import approximately 90 per cent of its refined Petroleum products through the Port of Mombasa in Kenya and the products are transported to Uganda using the pipeline owned and operated by the Kenyan Pipeline Company Limited (KPC)," Uganda AG states in the lawsuit papers.
Uganda contends that the importation and supply of refined petroleum products into its country has traditionally been handled by the Oil Marketing Companies (OMC) operating in Kenya through the Kenya Open Tender System (OTS) and subsequently through the Government-to-Government arrangements between Kenya and foreign Governments, that Kenya adopted in early 2023.
Under the arrangement, OMCs operating in Kenya import petroleum products and in turn, sell the same products to Uganda's OMCS.
"The complete reliance and dependency on Kenyan OMCs to import and supply petroleum products to Uganda have exposed the Republic of Uganda to supply vulnerabilities resulting in an avoidable increase in fuel pump prices," Uganda states in court documents.
In addition, the Government of Uganda reveals that it 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 its National Oil Company (UNOC) was empowered to be the sole importer and supplier of all the petroleum products, for the Ugandan market.
Consequently, sometime in April 2023, Uganda engaged the Kenyan authorities on the new policy for the sourcing, importation and supply of petroleum products meant for the Ugandan market.
The Kenyan authorities in line with the Principles and provisions of the Treaty and Protocols made thereunder, assured the Ugandan authorities of Kenya's unwavering support in the implementation of the said policy.
"Upon engagements with the relevant authorities in Kenya, UNOC sought to enter into a Storage and Transportation Agreement with KPC. Consequently, UNOC was required by the Respondent to meet certain regulatory requirements including obtaining an Import, Export and Wholesale of Petroleum Products (except LPG) Licence (hereinafter referred to as "the Licence") from EPRA to utilize the petroleum transit infrastructure in Kenya, especially the Kenya Pipeline systems in furtherance of the new Ugandan policy," Ugandan AG states.
He adds that Uganda found the requirements an unnecessary hindrance to the implementation of its petroleum policy as the petroleum products in issue were wholly transit goods not destined for Kenya.
UNOC, under protest, registered a branch in Kenya with the sole purpose of processing the Licence to fulfil its mandate under the revised policy to import all petroleum products for the Republic of Uganda
Upon registration, EPRA further required UNOC to provide several documents and meet a raft of requirements for EPRA to process and issue it with the Licence.
These requirements included among others a certificate of incorporation, CR12 from the Registrar of Companies, copies of identity cards or passports for all directors, valid work permits for all foreign directors working in Kenya and a valid tax compliance certificate from the Kenya Revenue Authority (KRA).
Others were proof of financial capability by either providing proof of operations in Kenya as a wholesaler with an annual sales volume of 6,600 cubic meters of either o a combination of premium motor spirit, automotive gasoil, Jet A1, or illuminating kerosene or certified audited accounts for the last three years indicating an annual turnover of US$10 million.
On September 30 last year, EPRA rejected the application for a licence by UNOC over alleged failure to prove the annual sale of 6.6 million litres of fuel and ownership of five licensed retail petrol stations and ownership of a licensed petroleum depot.
The Ugandan Minister of Energy and Mineral Development, on behalf of UNOC, wrote to the CS Ministry of Energy and Petroleum, Kenya requesting for a waiver of certain requirements for the Licence as the same were not applicable, practical or rational.
The Cabinet Secretary, Ministry of Energy and Petroleum, Kenya intimated to the Ugandan AG an intention to present to the Kenyan Cabinet the UNOC's request for a waiver of the specific requirements for consideration.
Following the Cabinet's decision, the Cabinet Secretary Ministry of Energy and Petroleum, Kenya requested EPRA to urgently review and align the petroleum import logistic arrangement in light of the policy shift in Uganda.
On November 7, 2023, a petition was filed in the High Court of Kenya at Machakos while UNOC's reapplication remained undetermined by EPRA for over two weeks after resubmission.
"The High Court of Kenya at Machakos on 7 November 2023 without according the Applicant and/or UNOC a hearing, inter alia, issued conservatory orders restraining EPRA from granting an Import, Export and Wholesale of Petroleum Products (Except LPG) licence to UNOC", the court documents read.
Further, the conservatory orders issued on November 7, 2023, inter-alia restraining EPRA from granting the Licence to UNOC were extended from December 6, 2023, to December 19, 2023, and on December 19, 2023, they were further extended to January 22, 2024.
According to Uganda, it at all material times, sought the intervention of the Republic of Kenya to restrain its organs of State from infringing the Principles and provisions of the Treaty and Protocols.
Uganda argues that it is a landlocked Country and has the right, under the Treaty for the Establishment of the East African Community and the United Nations Convention on the Law of the Sea, to which the Republic of Kenya is signatory, of access to and from the sea and freedom of transit through the territory of Kenya by all means of transport.
"The actions of EPRA in requiring UNOC to provide several documents and meet a raft of requirements in order for EPRA to issue the Licence is an action of the State for which the Respondent is responsible," Ugandan AG states.
The landlocked country adds that " the actions of the Judiciary of the Republic of Kenya in issuing the conservatory orders restraining EPRA from granting the Licence to the Applicant amounts to an action of the State for which the Respondent is responsible."
