Uganda is Kenya's largest trading partner, accounting for 11.1 per cent of Kenya's total exports. Kenya exported goods valued at Sh873.14 billion of which Sh97.16 billion went to Uganda.
More than half of the value of products Kenya sells to Uganda are re-exports of petroleum products that oil marketing companies (OMCs) import through Kenya.
In its legal papers, Uganda reckons Kenya is frustrating its efforts to be the supplier of all imports to the licensed oil marketing companies of petroleum products in the neighbouring country.
Uganda says Nairobi is blocking its efforts to ensure the security of the supply of its petroleum products, improving petroleum product stock holding levels within the country, and contributing to the competitiveness of consumer retail pump prices.
"The Republic of Uganda is a landlocked country and has the right, under the Treaty for the Establishment of the East African Community and the United Nations Convention on the Law of the Sea, to which the Republic of Kenya is a signatory, of access to and from the sea and freedom of transit through the territory of Kenya by all means of transport," says Kampala.
Uganda says its troubles with Nairobi began when it recently made a significant policy change regarding the sourcing, importation, and supply of petroleum products for the Ugandan market.
It says as a result, it empowered the Uganda National Oil Company (UNOC), a State Corporation fully owned by the Government of Uganda, to be the exclusive importer and supplier of all petroleum products for the country.
To effectively implement this policy, it says it became necessary for Uganda, through UNOC, to transport petroleum products from Kenya to Uganda using the infrastructure of the Kenya Pipeline Company (KPC) .
In April 2023, Uganda engaged with the Kenyan authorities to discuss and seek their support in implementing this new policy.
It says the Kenyan authorities, by the relevant treaties and protocols, assured Uganda of their unwavering support.
As part of the process, UNOC initiated discussions with KPC to enter into a Storage and Transportation Agreement.
However, before finalizing the agreement, UNOC was required by the Kenyan authorities to fulfill certain regulatory requirements. This included obtaining an Import, Export, and Wholesale of Petroleum Products (except LPG) License from the Energy and Petroleum Regulatory Authority (EPRA) .
Kenyan President William Ruto. [Rebecca Nduku, Standard] The latest suit by Uganda and its earlier concerns on Kenya's government-to-government deal have many wondering whether Kenya may have jumped from a bad system to a worse one.
The Kenyan Ministry of Energy and Petroleum started importing fuel under the government to government system in March last year. At the time the Ministry explained that it was primarily aimed at slowing down the weakening of the shilling.
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The deal has been seen to fail to deliver on easing pressure on the local currency. The shilling is now peeping at a low of Sh160 to the US dollar at the moment down from Sh127 in March when the new import system became operational.
The latest court dispute renews Kenya's past rivalries with Uganda.
Recently President Yoweri Museveni said he had shown restraint despite other unnamed nations adopting trade restrictions.
He reminisced about a period when Kenya had imposed trade restrictions by closing its borders.
However, instead of seeking revenge, he opted for dialogue as a means to resolve the conflict.
Likewise, he emphasized that engaging in dialogue with President William Ruto would establish a favourable atmosphere for both nations.
"In the early years of our Government, Mzee Moi, at one time, closed the border, but I rejected the arguments for retaliation," he said in his New Year address.
In 2016, Uganda ditched plans to team up with Kenya to build a pipeline from Hoima in the western part of the country to the Lamu Port.
It opted for the Tanzanian port of Tanga instead. The 1,445km EACOP was expected to cost Sh561 billion ($3.6 billion) - connecting parts of northern Tanzania, and western Uganda's oil
Previous hostilities between Kenya and Uganda have involved milk and sugar disputes.