Uganda is planning to extend a fuel pipeline from Eldoret in Kenya to Kampala to reduce fuel transport costs and improve supply security. The project is part of a larger plan in which the government wants to borrow about $2 billion (around Shs7.6 trillion) from oil trading company Vitol Bahrain E.C.
According to government documents, the pipeline extension is one of the key projects the government wants Parliament to approve. Other projects under the same loan include expanding fuel storage facilities and preparing for a future oil refinery.
The Ministry of Finance says about $1.2 billion (around Shs4.6 trillion) of the loan would be invested directly in oil-sector infrastructure. This includes extending the existing petroleum products pipeline from Eldoret to Kampala.
Uganda currently imports about 2.5 billion litres of fuel every year, spending nearly $2 billion. About 90 percent of this fuel comes through Kenya’s port of Mombasa and is then transported to Uganda by road or pipeline. Heavy reliance on road transport has increased costs, caused delays, and damaged roads.
Government officials say extending the pipeline will lower fuel transport costs, reduce fuel shortages, and ease congestion caused by fuel trucks on major highways. The project is also expected to reduce the risk of supply disruptions and improve fuel availability across the country.
The planned pipeline will connect Uganda to Kenya’s existing pipeline network, which runs from Mombasa through Nairobi and Eldoret. The extension is part of a wider Kenya–Uganda–Rwanda fuel corridor aimed at strengthening regional energy links.
The loan will run for seven years (84 months) and includes a two-year grace period before repayments begin. The Uganda National Oil Company (UNOC) will be the borrower, with repayments supported by government funding and revenues from fuel sales.
To secure the loan, the government plans to set up special accounts where fuel revenues will be deposited to ensure timely repayment. Parliament is being asked to approve the borrowing under Article 159 of the Constitution and allow the creation of these accounts.
Officials say the pipeline is also important as Uganda prepares to start producing crude oil later this decade. Strong fuel infrastructure will help the country handle future energy needs and support economic growth.
If approved, the Eldoret–Kampala pipeline extension will mark a major step in improving Uganda’s fuel transport system and reducing long-term energy costs for businesses and consumers.
