Ruto and Museveni handshake a blow to Tanzania

Dar es Salaam. A handshake between Kenyan President William Ruto and the President of Uganda, Yoweri Museveni, might spell bad news for Tanzania, which was eagerly waiting to secure a massive trade deal with Uganda.

While some might look at it as a mere gesture, the handshake signifies more than just a formality.

Here is why:

Tanzania and Uganda are on the verge of signing a lucrative oil import trade deal that would see Uganda import its fuel through the Port of Tanga instead of Kenya's Port of Mombasa or even the Port of Dar es Salaam. 

However, a recent visit by Ruto to Museveni's farm in Uganda could return Kenya to Uganda's good side. 

Sharing on X (formerly Twitter), Ruto said, "I am glad that the issues affecting the flow of petroleum products between Kenya and Uganda are being resolved. We have agreed on a way forward for sourcing and scheduling imports for the region in a manner that will ensure we achieve the most competitive pricing and maximum logistical efficiency."

As we previously reported, Uganda fell out with Kenya last year after the latter agreed to a government-to-government fuel deal with two Gulf nations without consulting Kampala. This made Uganda angry, with the situation compounded by the fact that the decision could affect price stability in Uganda.

The change of the fuel import system from an open tender policy to a government-to-government import mechanism sidelined many traders, favouring a few such as Saudi Arabia and the United Arab Emirates. Uganda then sued Kenya at the East African Court of Justice (EACJ) for the move.

In further retaliation for the fallout and looking for a second option, Museveni sent Energy Minister Dr Ruth Nankabirwa Ssentamu to Tanzania to meet with President Samia Suluhu Hassan. The Minister briefed President Hassan on Uganda’s proposed policy for bulk importation and supply of petroleum products to reduce fuel prices.

The Tanzanian Head of State welcomed Uganda’s efforts to lower fuel costs for its citizens and was willing to let the neighbouring country use the Dar es Salaam infrastructure to supply fuel to the capital city, Kampala.

The drastic move by Uganda was meant to stabilize fuel stocks, create security of supply, and solve price fluctuations in the country.

As part of the deal, Uganda’s Ministry of Energy signed a five-year contract with Vitol Bahrain E.C., a Bahrain-based company, to import fuel through the port of Dar es Salaam in Tanzania. 

However, the initial plan to use the Dar es Salaam Port as a gateway was reviewed and Uganda instead opted for the Tanga Port owing to distance issues: the road distance between Dar es Salaam and Kampala is 1,715.6km, which is 49.5 percent longer than the distance of 1,147.6km between Mombasa and Kampala and would have meant more costs for traders.

But still, whether Uganda chose to use Dar es Salaam or Tanga Port meant that Tanzania was on the winning side, especially considering that Uganda only imports 10 percent of its oil through Tanzania, while 90 percent of oil valued at $2 billion annually is transported through Kenya.

But as negotiations were still ongoing, Ruto was weaving his plan, which manifested on February 26 when he and his often-political opponent paid a courtesy call to Museveni's palatial estate.

Part of what the three leaders discussed was put on public record, with one particular topic on addressing energy and petroleum challenges sticking out. 

As Tanzania continues to invest in its port operations and attract new business, her closest competitors are also eyeing a piece of the same pie. 

Whether or not the issues that led to Uganda ditching Kenya and turning to Tanzania have been resolved remains to be seen, but as it stands, it looks like Kenya is committed to winning Uganda back.