Kenya’s major oil products transporter, the Kenya Pipeline Company (KPC), has downplayed concerns that Uganda’s planned $4 billion oil refinery could undermine its regional business, insisting the project poses no immediate threat to its operations or export volumes.
Uganda’s refinery project, located in the Albertine Graben, is expected to have a processing capacity of 60,000 barrels of crude oil per day when completed, with operations projected to commence between 2029 and 2030. The Uganda National Oil Company is slated to hold a 40 per cent equity stake in the refinery, while the remaining shares will be controlled by Alpha MBM Investments LLC.
The project has attracted wide attention among oil industry stakeholders across East Africa, particularly in Kenya, where concerns have been raised that the refinery could significantly reduce Uganda’s dependence on imported petroleum products, most of which currently transit through Kenya.
At present, Uganda spends about $2 billion (Sh258 billion) annually importing refined petroleum products, largely routed through Kenya’s pipeline and port infrastructure. Analysts have suggested that once the refinery becomes operational, it could dent the regional expansion plans of the Kenya Pipeline Company, especially the proposed Eldoret–Kampala–Kigali refined petroleum products pipeline.
However, KPC Managing Director, Mr Joe Sang, has dismissed such fears, stating that the refinery would not have any meaningful impact on the company in the near to medium term.
“Uganda refinery is not a threat. It will take up to 15 years for Uganda to start refining oil,” Sang said during a media briefing in Nairobi on the company’s ongoing Initial Public Offer (IPO).
Kenya Pipeline, which is currently in the process of divesting government-owned shares, has offered 11.81 billion ordinary shares for sale at Sh9 per share, representing a 65 per cent ownership stake in the company.
According to the IPO information memorandum, the firm’s future investments will be financed through a mix of internally generated funds and innovative financing options, including access to debt capital markets, special purpose vehicle (SPV) project financing, joint ventures and strategic partnerships.
KPC disclosed that about 90 per cent of its refined petroleum throughput—estimated at 2.5 billion litres annually—is exported to Uganda, making the country its largest transit market for petroleum products.
Despite Uganda’s refinery ambitions, Kenya Pipeline expressed confidence that the landlocked country would continue to import refined petroleum products for the foreseeable future.
“Even when refining capacity becomes a reality, world oil markets are fully integrated. There are no regional oil markets; all oil competes globally based on production efficiency and scale economics,” the company said.
It added that Eastern Africa’s consumption levels remain too low to justify large-scale crude oil refining at margins comparable to leading global markets, suggesting that refined petroleum imports will remain a critical part of the region’s energy mix for years to come.
