In the aftermath of Uganda and four other East African countries distancing themselves from a government-to-government (G2G) oil deal with Kenya, President William Ruto's economic advisor, David Ndii, sheds light on potential benefits for Kenya.

Ndii addresses concerns raised by Kenyans regarding Uganda's decision to directly purchase oil from foreign companies, bypassing Kenyan intermediaries. He emphasizes that a significant portion of the oil will still traverse the Kenyan pipeline, accompanied by an international practice of imposing a tariff charge on such transits.

Highlighting the positive impact on Kenya's balance of payments, Ndii explains, "If Uganda or any other country opts to import directly, the products will become transit goods. A transit tariff for the use of the pipeline will apply—standard international practice now recorded in our Balance of Payments as a service export."

This response from Ndii follows economists' apprehensions about the potential economic repercussions of Uganda and other East African Community (EAC) nations opting out of the Kenyan oil deal. Economic expert Mohamed Wehliye and his peers advise President William Ruto to negotiate a win-win formula to salvage the situation.

Wehliye suggests an alternative approach, proposing negotiations with foreign Oil Marketing Companies (OMCs) for dual pricing—one for domestic OMCs and another for airlines and foreign OMCs paying in cash. The goal is to ensure a fair regional government-to-government (G2G) arrangement.

The initial support for the Kenya oil deal by countries like Uganda was driven by local companies acting as middlemen, selling fuel to Uganda's petrol stations at a profit. However, due to the high prices set by Kenyan companies, the cost of fuel in Uganda was on a continuous upward trajectory.

With the Ugandan Parliament passing the Petroleum Supply (Amendment) Bill 2023, Uganda now opts to purchase oil directly from foreign OMCs, bypassing Kenyan companies. Tanzania emerges as Uganda's preferred alternative, raising concerns from the Kenya Pipeline Company (KPC). The KPC warns that Kenya stands to lose up to Ksh2-3 billion annually due to the altered supply logistics favoring the Central Corridor Transit Route (CCTR) over the Northern Corridor Transit Route (NCTR).