Kampala, Uganda. In a nutshell, Uganda’s plan to import fuel into Kenya is facing delays due to a legal battle. Uganda’s National Oil Company (UNOC) wanted to import and sell petroleum products in Kenya but some Kenyan companies went to court, blocking the process.
However, the Kenyan High Court in Machakos County has once again postponed the resolution of a legal dispute involving the state-owned Energy and Petroleum Regulatory Authority (Epra) and the UNOC.
The court, on January 22, rejected a petition seeking to dismiss the case, prolonging the process until February 12. But UNOC officials, who filed the injunction in December of the previous year, have expressed optimism despite the delays.
The legal saga began on November 7, 2023, when the Deputy Registrar of the High Court of Machakos issued a decision to block Epra from issuing a petroleum import license to UNOC.
This ruling followed a lawsuit filed by Royani Energy Limited, John Kinuthia Mwangi, and Acacia Ridge Construction.
The injunction affected Unoc’s planned takeover of the sole importation of petroleum products in January, authorized by the new Petroleum Supply Amendment Act, 2023.
UNOC, after registering a branch in Kenya, applied to Epra in September for registration to freely import and export petroleum products.
However, Epra rejected the request, citing UNOC’s failure to meet certain conditions, including evidence of operating licensed retail stations and depots in Kenya, achieving a minimum annual turnover of $10 million (Apprx. Ugx3,812,767,203), and substantiating required annual sales volumes.
As Epra was considering waiving these conditions, the petitioners took the matter to court, successfully obtaining a court order blocking the license issuance. UNOC’s subsequent application for dismissal was first heard on December 6, 2023, then pushed to December 19, and most recently extended to February 12.
According to Peter Muliisa, UNOC’s head of legal and corporate affairs, they are optimistic for a favourable outcome, noting that the court had narrowed down the issues from eight to two.
The focus now includes examining whether the Kenyan Minister of Petroleum and Energy’s request to waive requirements from UNOC interferes with Epra’s independence and whether Epra has the legal mandate to waive the requirements.
Despite the recent setback, Muliisa sees the court’s decision as a clear point from which to argue and remains optimistic about the case’s ultimate success.
The legal battle also prompted Uganda to involve the East African Court of Justice (EACJ), with Attorney General Kiryowa Kiwanuka seeking an order for Epra to issue UNOC with the license and the dismissal of the Machakos case based on the East African Community treaty allowing free trade between member countries.
UNOC’s importation deal, shifting from the Open Tender System (OTS) to Government-to-Government (G-2-G), has faced challenges in Kenya, hindering the government’s direct dealings with Gulf oil firms through UNOC.
The Petroleum Supply Amendment Act, 2023, enacted in October of the previous year, granted UNOC the sole deal, but ongoing legal disputes have cast uncertainty on its implementation.
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