Uganda has moved to end the lucrative oil business with Kenya reviving its trade pact with neighbours Tanzania.

Last week, Uganda Railways Corporation began a trial delivery of 500,000 litres of petroleum products across Lake Victoria, resuming shipments after a 16-year break with Tanzania.

The move jeopardizes business with the Port of Mombasa as Uganda accounts for about three-quarters of Mombasa port’s transit cargo.

 

The port of Mombasa. FILE

The move to end the business with Kenya risks further hurting the Port of Mombasa which is currently struggling and facing intense competition from Tanzania's Ocean Ports of Dar es Salaam and Tanga.

Uganda, which is a landlocked country, consumes about 185 million litres of fuel products monthly. 

Most of the fuel consumed in Uganda is trucked through Kenya via the Port of Mombasa which is the main distributor according to John Friday, the assistant commissioner for petroleum supplies.
 
The Port of Mombasa serves South Sudan, the Democratic Republic of Congo, Rwanda, and parts of Tanzania. 

This comes just months after both countries reached an agreement to resolve the persistent trade dispute between them following a seven-day visit by officials from Nairobi to Kampala.

Led by Cabinet Secretary for Trade and Industry Betty Maina, the Kenyan officials visited Uganda on April 11 to discuss non-tariff barriers (NTBs) affecting trade between the two countries and verify the Ugandan sugar industry to ensure that exports of the product into Kenya are wholly produced in Uganda.

In response to the concession, Uganda signed a commitment to abolishing 13 percent excise duty on Kenyan-manufactured juices, malted beers, and spirits with effect from July 1 and also scrap a 12 percent verification fee on pharmaceuticals manufactured in Kenya.

A ship docked at the Port of Mombasa. FILE Kenyans.co.ke