Kenya is likely to lose billions of shillings in oil trade after landlocked East African countries started showing reluctance to import their fuel through Kenya.
Uganda has already resolved to stop importing fuel through Kenya due to the controversial government-to-government deal between the Kenyan government and Gulf countries that has seen fuel prices increase significantly. [1]
A Kenyan oil firm CEO speaking to BBC revealed that Rwanda, Burundi, the Democratic Republic of Congo, and South Sudan were also considering their oil business dealings with Kenya.
The four countries due to lack of a seaport import most of their petroleum products through Kenya.
It has been revealed that the countries are not happy with Kenya’s government-to-government oil deal as well as the increased taxes levied on fuel.The increased taxes and levies imposed through the Finance Act 2023, have made fuel expensive in EAC countries importing the product through Kenya. [2]
"The region is not asleep and has aligned infrastructure projects to manage our dominance. It has options and in the long run, Kenya shall lose big time," the CEO warned.
Tanzania and Sudan are the likely beneficiaries should landlocked East African Countries drop the Port of Mombasa as the entry point of their petroleum products.
Uganda has already indicated that it will use Tanzania to keep its reserve fuel stocks.
Although Sudan is currently embroiled in conflict which has stalled regional trade, it has five major ports that can serve as an alternative to the Port of Mombasa.
Uganda used to import 90 per cent of its fuel from Kenya with only 10 per cent from Tanzania signalling how much Kenya is going to lose because of the controversial oil deal and unfavourable business ecosystem.
Additionally, 40 per cent of Kenya’s total fuel imports find their way to DRC and South Sudan mostly through Uganda.
Kenya is expected to lose a minimum of Ksh15 billion in revenue should Uganda finalise a deal with Tanzania over the importation of fuel. [3]
References
- ^ between the Kenyan government and Gulf countries (www.kenyans.co.ke)
- ^ EAC countries importing the product through Kenya. (www.kenyans.co.ke)
- ^ lose a minimum of Ksh15 billion in revenue (www.kenyans.co.ke)
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