UNOC Explains Why Kenyan Branch

Uganda National Oil Company (UNOC) has defended the registration of a branch in neighboring Kenya. A statement by the Company on Monday explained that it had to comply with regulations regarding the importation of petroleum products.

“A certificate of incorporation issued in a country of incorporation, in this case Uganda is what is used to register a branch in another country. This is common for businesses operating across countries” said a statement by the Company’s head of Corporate Affairs, Sarah Banage. 

She further indicated that the Kenyan branch is part of the government’s strategic decision to enhance its involvement in ensuring the security of the supply of petroleum products by mandating UNOC to source and supply petroleum to oil marking companies (OMCS).

Her statement came after some legislators indicated that they had information that some Ugandan individuals and a Kenyan national were behind the registration of UNOC’s Kenyan branch. The alarm was raised by Parliament’s Natural Resources Committee Chairperson, Emmanuel Otaala. 

Otaala, who represents West Budama South expressed fear that the individuals could end up snatching the lucrative fuel importation business yet the government’s intention had been that UNOC take over the importation of petroleum products. Uganda National Oil Company Limited (UNOC) is a company wholly owned by the Government of Uganda. 

It is charged with the responsibility of managing State participation in petroleum activities along the entire petroleum value chain from upstream, midstream, and downstream. The Company was established by Act of Parliament; Section 42 of the Petroleum (Exploration, Development and Production) Act, 2013, and incorporated in June 2015 under the Companies Act (2012) as a limited liability company.

The Minister of Energy and Mineral Development and the Minister of Finance, Planning, and Economic Development are the major shareholders with 51% and 49%. But amid Kenya and Uganda's fuel importation row, there emerged information in the Kenyan press that UNOC is owned by six Ugandans and a Kenyan. The directors and shareholders of the UNOC branch in Kenya include Irene Pauline Bateebe.   Engineer Irene Bateebe is the current permanent secretary at the Ministry of Energy. 

The other shareholder according to Standard Media was listed as Malachi Omolloh Adedeh (Kenyan). Malachi Omolloh Adeda is a renowned Kenyan lawyer and CEO of Liroja Services. Others included Zulaika Mirembe Kasajja, Francis Nuru Twinamatsiko, Francis Wambede Nagimesi Francis Nagimesi is a Board Member at UNOC), Stella Marie Biwaga, a member of the Board of Directors of the Uganda National Oil Company Ltd (UNOC), a Member of – the Board of Directors of the National Pipeline Company (U) Ltd and Emmanuel Katongole.   

Uganda National Oil Company had applied for a license in Kenya to directly import fuel using the Kenya Pipeline. The Energy and Petroleum Regulatory Authority (Epra) however turned down the request saying that UNOC did not meet most of the criteria. Sources indicate that UNOC’s move to register a branch in Kenya was part of the efforts to meet some of the criteria set by the Energy and Petroleum Regulatory Authority (ERA).    

Energy and Mineral Development Minister, Ruth Nankabiriwa last month said the government decided that the UNOC should source and supply the petroleum products to the licensed Oil Marketing Companies for Uganda.  She tabled the Petroleum Supply (Amendment) Bill, 2023 before parliament. The Bill, if approved will mandate the Uganda National Oil Company to import petroleum products for the Ugandan market.  

At the time the Bill was presented to parliament, Uganda National Oil Company had negotiated a five-year contract with Vitol Bahrain E.C. According to the minister, Vitol Bahrain E.C. will finance the business by providing a working capital facility. The deal was endorsed by President Museveni who in a statement last week said the move was aimed at kicking middlemen out of the fuel importation supply value chain. Museveni said Uganda imports petroleum products of the magnitude of 2.5 billion liters per annum valued at about US$ 2bn. 

“Without my knowledge, our wonderful People were buying this huge quantity of petroleum products from middlemen in Kenya. A whole country buying from middlemen in Kenya or anywhere else!! Amazing but true” said Museveni. Following the disagreements in Kenya including a legal suit filed at the High Court in Kenya, it appears that Uganda may shift to import more of its fuel through Tanzania. Nankabirwa last week led a delegation to Tanzania. 

The delegation which included, the Permanent Secretary, Irene Bateebe met President Samia SuluhuHassan and briefed her about Uganda’s proposed policy for bulk importation and supply of petroleum products to reduce fuel prices. Nankabirwa according to a statement issued by her ministry reportedly outlined the potential benefits of the importation policy.