Tanzania Loses Lucrative Oil Deals With Rwanda & 2 EAC Countries to Kenya through Kenya Pipeline Company (KPC)

Kenya is strategically countering Tanzania’s oil trade ambitions by seeking new deals with Rwanda, the Democratic Republic of Congo (DRC), and South Sudan.

Reports suggest that Kenya, through the Kenya Pipeline Company (KPC), is close to finalizing an agreement with Rwanda. This deal, expected to be signed within 90 days, would have Rwanda import oil via the Port of Mombasa instead of Tanzania’s Dar es Salaam Port.

This development is a significant setback for Tanzania, which has been planning to use its ports for oil transport to Rwanda since 2021.

In addition to the potential Kigali agreement, a KPC delegation is currently in the DRC, aiming to secure a similar deal. Kenya has also increased investment in advanced infrastructure to ensure South Sudan depends on the Port of Mombasa for its oil needs.

Joe Sang, the CEO of KPC, highlighted the strategic importance of these deals, stating, “We are now fine-tuning the last steps of the process and, therefore, with Rwanda coming on board, we have a larger market to serve and even generate more revenues” (The Africa Report).

This agreement is expected to be a foreign exchange boon for Kenya, as Rwanda currently imports only 3 percent of its oil through Kenya.

The agreements with Rwanda, the DRC, and South Sudan are timely, as Uganda has tentatively agreed to continue importing Ksh264 billion worth of fuel annually through Kenya. Uganda had previously considered switching to the Tanzania route due to perceived exploitation by Kenyan-based Oil Marketing Companies (OMCs).

Uganda will also benefit from the Kenya-Rwanda deal, as the fuel will pass through its territory and be subject to standard levies. KPC will transport the fuel destined for Rwanda to Eldoret, from where it will be trucked through Uganda to Kigali.

Sang is optimistic about increasing oil export volumes not only to Rwanda but also to Burundi and South Sudan. Similar to the Rwanda case, South Sudan will receive its refined fuel through Uganda after collection from the Eldoret KPC depot.