Nankabirwa (centre), together with Irene Bateebe, the Permanent Secretary at the Ministry of Energy (left) append their signatures on documents shortly after concluding the purchase of shares in KPC in Nairobi recently
By Our Reporter
Uganda has taken a strategic stake in Kenya’s fuel transport network after acquiring 20.15% of the Kenya Pipeline Company (KPC) for about US$255 million, a move officials say will give Kampala greater influence over the infrastructure that supplies most of its petroleum products.
The investment follows Kenya’s decision to list 65% of KPC shares on the Nairobi Securities Exchange through an initial public offering, ending decades of full state ownership. Uganda moved quickly through the Uganda National Oil Company (UNOC) to secure a significant shareholding, arguing that its economy depends heavily on the pipeline network that carries fuel from the port of Mombasa into the region.
Nearly 95% of Uganda’s imported petroleum products pass through the Kenyan pipeline system, accounting for about 2.96 billion litres annually. The transit trade also represents about 65% of KPC’s volumes and roughly 35% of its revenues, yet Uganda previously had no formal say in tariff decisions, infrastructure expansion or company strategy.
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Nankabirwa (centre), together with Irene Bateebe, the Permanent Secretary at the Ministry of Energy (left) append their signatures on documents shortly after concluding the purchase of shares in KPC in Nairobi recently
By Our Reporter
Uganda has taken a strategic stake in Kenya’s fuel transport network after acquiring 20.15% of the Kenya Pipeline Company (KPC) for about US$255 million, a move officials say will give Kampala greater influence over the infrastructure that supplies most of its petroleum products.
The investment follows Kenya’s decision to list 65% of KPC shares on the Nairobi Securities Exchange through an initial public offering, ending decades of full state ownership. Uganda moved quickly through the Uganda National Oil Company (UNOC) to secure a significant shareholding, arguing that its economy depends heavily on the pipeline network that carries fuel from the port of Mombasa into the region.
Nearly 95% of Uganda’s imported petroleum products pass through the Kenyan pipeline system, accounting for about 2.96 billion litres annually. The transit trade also represents about 65% of KPC’s volumes and roughly 35% of its revenues, yet Uganda previously had no formal say in tariff decisions, infrastructure expansion or company strategy.
Energy Minister Ruth Nankabirwa said the share purchase was intended to safeguard Uganda’s energy security and ensure the country participates in decisions affecting its fuel supply chain. The agreement includes provisions allowing Uganda to appoint two directors to the nine-member KPC board and grants it veto powers over key decisions such as tariff changes, dividend policy adjustments and major restructuring.
For Kenya, the IPO is part of a broader effort to raise revenue and partially privatize state assets while retaining a 35% stake in one of its most strategic energy companies. The offer was structured so that proceeds from the share sale go directly to the Kenyan treasury.
However, analysts say the deal also raises financial and governance questions. Some observers argue Uganda stepped in partly because investor demand for the IPO appeared weaker than expected. Critics warn that committing hundreds of millions of dollars to a foreign infrastructure asset could expose Uganda to long-term financial risks, especially if regional fuel flows change.
Uganda is simultaneously exploring alternative fuel supply routes through Tanzania and planning a domestic oil refinery, developments that could reshape regional petroleum trade. If the refinery comes online, Uganda could eventually export refined products, potentially reducing its dependence on imports through Kenya.
Supporters say the investment still makes sense because it gives Uganda leverage in a sector vital to its economy. With growing demand for fuel across the Great Lakes region, both countries could benefit from stronger cooperation in pipeline expansion and regional energy logistics.
The success of the investment will ultimately depend on future pipeline tariffs, dividend returns and how regional energy infrastructure evolves in the coming years.
