Uganda has taken legal action against Kenya in the East African Court of Justice (EACJ) after Nairobi denied a local license to Uganda's government-owned oil marketer, the Uganda National Oil Corporation (UNOC).

The license denial relates to granting UNOC permission to operate in Kenya and handle fuel imports bound for Kampala.

The problem started in November 2023 when Kenya refused to grant UNOC the necessary license, prompting Uganda to seek intervention from the regional court in a bid to compel Kenya to issue the required authorization.

As stated in court documents filed by the Ugandan Attorney-General, the country argues that Kenya has backtracked on a commitment made in April 2023 to support Uganda's initiative to directly import fuel starting in January 2024.

Kenya, through the Ministry of Energy and the Energy and Petroleum Regulatory Authority (EPRA), reportedly imposed various requirements on UNOC to secure the license. The conditions included proof of annual sales of 6.6 million litres of super petrol, diesel, and kerosene, ownership of a licensed petroleum depot, and a minimum of five retail stations locally. As reported, UNOC is protesting against the requirements, saying they are unnecessary hindrances, as the petroleum products in question are solely transit goods not intended for Kenya.

Starting January, Uganda plans to source fuel directly from Vitol Bahrain, following challenges sparked by Kenya's decision to engage in a government-backed deal with three Gulf oil majors.

Amid the delays in securing a local license from Kenya, it is understood that Uganda has explored alternatives, including discussions with Tanzania to use the Port of Dar es Salaam for fuel imports.

"In order to implement the policy of directly purchasing fuel in the global market, it is necessary for the Republic of Uganda, through UNOC, to transport petroleum products through the Republic of Kenya under the infrastructure of KPC," emphasizes Uganda's Attorney-General in the court documents.

Uganda, which annually imports around 2.5 billion litres of petroleum valued at $2 billion, relies on Kenya to handle at least 90 percent of the imports.

A potential shift to the Tanzanian port of Dar es Salaam could significantly impact Kenyan ports' revenues, considering Uganda's status as the single biggest market for transit fuel imported through Kenya.