Uganda secures stake in Kenya Pipeline Company IPO

Uganda has secured a strategic foothold in Kenya’s petroleum logistics chain after concluding negotiations to participate in the upcoming Initial Public Offering (IPO) of Kenya Pipeline Company (KPC), in a move officials say is designed to protect the country’s fuel supply and deepen regional energy integration.

Energy Minister Ruth Nankabirwa Ssentamu and Attorney General Kiryowa Kiwanuka led a high-level delegation to Nairobi on Friday to formalise Uganda’s participation in the share offer. The investment will be executed through the Uganda National Oil Company (UNOC), the state-owned firm mandated to manage the country’s commercial interests in the petroleum sector.

Government officials framed the move as more than a financial investment, describing it as a strategic recalibration of Uganda’s position within East Africa’s fuel supply architecture.

“This is a deliberate strategic decision aimed at strengthening regional energy cooperation and safeguarding national interests,” Ms Nankabirwa said. “The investment will enhance security of access to petroleum products, improve affordability, and reinforce long-term supply stability for Uganda and the wider region.”

KPC operates over 1,700 kilometres of pipeline infrastructure across Kenya, transporting refined petroleum products from the Port of Mombasa to Nairobi and onward to western Kenya, forming the backbone of the corridor that supplies Uganda. Kampala imports virtually all its refined fuel through Kenya’s port and pipeline system, making the route critical to domestic energy security.

Uganda consumes an estimated 2.3 to 2.5 billion litres of petroleum products annually, with demand growing between 7 and 10 percent each year, driven by urbanisation, industrialisation and a rapidly expanding vehicle fleet. Any disruption along Kenya’s logistics corridor—whether at the port, within pipeline infrastructure or at border transit points—has immediate consequences for pump prices and supply stability in Uganda.

Previous bottlenecks and global price shocks have pushed petrol and diesel prices beyond Shs6,000 per litre during peak volatility. By taking equity in KPC, Uganda aims to secure not only dividends but also board-level visibility over decisions affecting tariffs, expansion plans and operational management of infrastructure that underpins its fuel imports.

Permanent Secretary at the Energy Ministry, Eng Irene Pauline Bateebe, said Kenya’s willingness to open KPC’s shareholding to Uganda marks a new phase in bilateral energy cooperation.

“Following the IPO, Uganda looks forward to working closely with the Government of Kenya and other shareholders to advance the company’s business objectives, enhance operational efficiencies, and promote regional energy integration,” she said.

Mr Kiwanuka said the agreement aligns with Uganda’s obligations under the East African Community (EAC), which promotes economic integration and harmonised infrastructure development among member states. Energy has increasingly emerged as a central pillar of that agenda.

The region is already collaborating on the East African Crude Oil Pipeline (EACOP), which will transport Uganda’s crude oil from Hoima to Tanzania’s coast for export. Uganda’s entry into KPC complements that initiative by strengthening its stake in the refined product import corridor even as it prepares to become a crude oil exporter.

Uganda expects first oil from the Tilenga and Kingfisher fields in 2026–2027, with peak production projected at 230,000 barrels per day. However, despite anticipated upstream output, the country will continue to depend on imported refined products until a planned 60,000-barrels-per-day refinery in Hoima is realised. That project has faced financing and investor delays.

Until domestic refining capacity is established, Kenya’s infrastructure remains Uganda’s energy lifeline. Analysts say acquiring equity in KPC could cushion Kampala against future tariff adjustments and logistical constraints that have historically amplified domestic fuel inflation.

However, participation in an IPO carries commercial risk. The valuation of KPC, share pricing and post-listing governance structure will determine whether Uganda’s investment delivers both strategic leverage and financial returns.

Transparency advocates are also expected to scrutinise the transaction, including the size of the stake, funding arrangements and anticipated returns. Officials have yet to disclose how much UNOC will invest or the percentage shareholding Uganda intends to acquire.

Petroleum products consistently rank among Uganda’s top imports, exerting pressure on foreign exchange reserves, according to central bank data. By converting part of its recurring fuel import expenditure into equity ownership within the supply chain, Uganda is seeking to shift from passive consumer to strategic stakeholder in East Africa’s petroleum logistics network.

“This milestone demonstrates Uganda’s commitment to deepening bilateral relations with Kenya and advancing regional integration,” Mr Kiwanuka said.

If successfully implemented, Uganda’s entry into KPC could redefine its role in the region’s energy economy, strengthening supply security at home while embedding the country more firmly within the architecture that powers East Africa’s growing demand.