Kenya urges Uganda to clarify on the additional imported oil cargo
Kenya did not impose a bond premium on Uganda’s oil cargo that docked at the Port of Mombasa early this month as claimed by Uganda’s Energy and Mineral Resources Minister Ruth Nakabirwa.
The minister made the accusation that Kenya’s Energy Cabinet Secretary, Davis Chirchir, had written to the Kenya Revenue Authority (KRA) requesting an increase in the fee. Kenya has however denied the minister’s claims.
“The cabinet secretary has no such power. Uganda must come clean on undeclared consignment of 17,000 cubic metres of diesel that attracted additional charges,” a top official at the ministry told the Star paper in Kenya.
He continued by saying that KRA is governed by the East Africa Customs Management Coordination Act, to which any person running a custom-bonded warehouse is required to abide.
Kenya claims that VTTI, a privately operated terminal that handles Uganda’s shipment, sets its own rates.
“Therefore, other than taxes which are statutory, including the rules of operation of custom bonded facilities, the rates charged by VTTI are purely commercial and are set by them and not the Government of Kenya.”
Due to Uganda’s 60 KT of imports, smaller vessels are required, which raises the cost of freight.
To maximize freight economy, Uganda, for example, recently brought a diesel vessel that carried excess stuff that was not needed locally.
According to documents obtained by the Star newspaper in Kenya , VTTI imported 82,000 cubic meters of diesel under the terms of the direct import agreement with Uganda National Oil (UNOC), which was more than Kenya’s permitted 65,000 cubic meters.
VTTI has acknowledged receiving more than anticipated volumes in a letter dated July 2 addressed to Dr. Lilian Nyawanda, Commissioner of Customs and Border Control; the letter was also copied to Mohamed Liban, Kenya’s PS for Energy, KRA Commissioner General Humprey Watanga, and Chief Manager of the Petroleum Monitoring Unit at KRA Benard Kibiti.
“In this regard, we wish to appeal to your good office to consider a request to support the receipt of the said cargo of gasoil imported by UNOC,” the letter reads in part.
“The volumes received by the terminal above the volume currently assessed by KRA to be covered by the existing bond shall remain in the terminal pending completion of the two processes or as may be guided by KRA’s resident officer.”
According to Nakabirwa, Kenya increased its warehousing bond to $45 million in an attempt to thwart Uganda’s first G to G oil delivery, as reported by a number of regional newspapers.
She argues that the additional levies are likely to further push up pump prices, defeating the very purpose of the deal that intended to cut off middlemen, thereby guaranteeing much more affordable fuel prices to consumers.
However, Kenya claims that the increased bond cost on the additional consignment will probably harm Ugandan fuel consumers, who were previously receiving significantly cheaper prices under the old system in which Kenyan oil marketers handled imports.
The shift has since introduced inefficiencies and escalated transport and import costs, directly impacting Ugandan consumers with rising oil prices.
These additional expenses are a further financial strain on Uganda.
The Ugandan oil agency is now forced to pay $37.83 per cubic meter to use the KPC’s infrastructure, a move likely to push up pump prices in the landlocked nation by 30 percent, despite a drop in global rates.
Source; The Star Kenya
