Kenya’s leading refined petroleum transporter has downplayed concerns over Uganda’s newly signed $4 billion oil refinery project, insisting that the development will not significantly disrupt its operations or regional oil trade in the near future.
Uganda National Oil Company (UNOC) recently entered into a landmark agreement with Dubai-based Alpha MBM Investments LLC to build a refinery in the Albertine Graben.
Under the deal, UNOC will retain a 40% equity stake, while Alpha MBM will hold the controlling interest.
The refinery is expected to come on stream between 2029 and 2030 and is projected to reduce Uganda’s annual petroleum import bill of about $2 billion.
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The announcement has drawn attention from oil industry players across East Africa, particularly Kenya Pipeline Company (KPC), which currently transports the bulk of refined petroleum products consumed in Uganda.
Despite speculation that the refinery could weaken Kenya’s role as Uganda’s main fuel transit route, KPC has dismissed the suggestion.
According to reports by The Star Kenya, KPC managing director Joe Sang said Uganda’s refinery plans do not pose a threat to the company’s business model.
Speaking during a media briefing on KPC’s initial public offering in Nairobi, Sang noted that it would take many years before Uganda refines oil at a scale capable of displacing existing supply arrangements.
KPC, which is in the process of listing 11.81 billion ordinary shares representing a 65% stake at Sh9 per share, currently exports about 90% of its refined petroleum—roughly 2.5 billion litres annually—to Uganda, making it its largest transit market.
The company remains confident that Uganda will continue to import refined products for the foreseeable future.
While KPC’s proposed Eldoret–Kampala–Kigali pipeline expansion could face some pressure once the Ugandan refinery becomes operational, the company argues that global oil markets are fully integrated and not constrained by regional boundaries.
As a result, refined products compete globally based on efficiency, scale, and cost.
Kenya Pipeline added that it would take a long time for East Africa’s consumption levels to justify refinery operations that can match the scale and margins of leading global refining hubs, reinforcing its view that Uganda’s refinery will not immediately alter regional fuel trade dynamics.
