Uganda Moves to Buy Stake in Kenya Oil Pipeline

KPC operates more than 1,700 km (1,056 miles) of petroleum pipelines linking the port of Mombasa to Nairobi, western Kenya and onward to Uganda. The system currently handles about 90% of Uganda’s fuel imports, making it critical to the country’s energy security

Kenya plans to list the KPC IPO on the Nairobi Securities Exchange

Uganda plans to use part of a proposed $2 billion loan backed by global oil trader Vitol to acquire a stake in Kenya Pipeline Company (KPC), the strategic fuel transporter that handles most of Uganda’s petroleum imports, according to a finance ministry brief seen by ChimpReports.

The plan comes as Kenya prepares to divest up to 60% of KPC through an initial public offering (IPO), opening the state-owned pipeline operator to regional governments and investors.

In a request to parliament, Uganda’s Ministry of Finance said the borrowing would support several oil-sector investments, including the “acquisition of shares in Kenya Pipeline Company,” alongside expansion of fuel storage, pipelines and refinery infrastructure.

Kenya’s President William Ruto confirmed recently that Nairobi intends to sell up to KES 60 billion ($460 million) worth of shares in KPC as part of a broader privatisation drive, while retaining a strategic stake.

“It is a regional facility. I want to encourage Ugandans and East Africans to equally invest,” Ruto said during a visit to eastern Uganda, adding that shares would be available to public entities and citizens across the region.

KPC operates more than 1,700 km (1,056 miles) of petroleum pipelines linking the port of Mombasa to Nairobi, western Kenya and onward to Uganda.

The system currently handles about 90% of Uganda’s fuel imports, making it critical to the country’s energy security.

Uganda’s finance ministry said acquiring a stake in the pipeline operator would strengthen control over fuel supply logistics and support its wider oil and gas strategy as the country prepares to produce crude later this decade.

UNOC

Under the proposal, the borrowing would be undertaken by the state-owned Uganda National Oil Company (UNOC), with repayments supported by government capitalisation and secured against revenues from fuel sales and oil-related projects.

The move also aligns with Kenya’s push to deepen regional infrastructure co-ownership. Ruto said ministers from both countries had been directed to facilitate joint ownership of KPC at government and private-sector level, following talks between Nairobi and Kampala.

Uganda has in recent years increased its reliance on regional infrastructure partnerships as global financing for fossil fuel projects has tightened due to the energy transition.

Kenya plans to list the KPC IPO on the Nairobi Securities Exchange, with allocations expected for institutional investors, regional governments and East African citizens, according to officials.