Uganda takes control of Kenya Pipeline as Museveni secures veto power, two board seats

Kenya Pipeline Company, Nakuru depot [Kipsang Joseph, Standard]

Uganda has secured veto power over the hiring and firing of  Kenya Pipeline Company's (KPC) chief executive. It has also won two seats on the board of the strategic State-owned firm, giving President Yoweri Museveni's government effective control over Kenya's fuel transport infrastructure in a deal that critics say compromises Kenya's energy sovereignty.

The appointments of Uganda's Permanent Secretaries for Finance and Energy, Dr Ramathan Ggoobi and  Irene Bateebe, to the KPC board took effect on July 28.

KPC announced on July 29 in a notice to shareholders that it had appointed five non-executive directors, stating:

"The board warmly welcomes the new directors and looks forward to working with them as they assume their governance responsibilities. The board is confident that their diverse experience and leadership will support the effective discharge of the board's oversight role and contribute to the continued advancement of KPC's strategic objectives, long-term sustainability and commitment to the highest standards of corporate governance."

They join three Kenyan directors, namely Eng Meshack Kidenda, a former director general of the Kenya National Highways Authority; Samson Burgei, alternate director to Kenya's Cabinet Secretary for National Treasury; and the General Manager of Finance and Investments at the National Social Security Fund Ronald Nyamosi,

The KPC boardroom overhaul follows Uganda's acquisition of a 20.15 per cent strategic stake in KPC through the Uganda National Oil Company (UNOC) during the company's initial public offering in February, when Kenya sold 65 per cent of its shares to the public. The IPO raised Sh106.3 billion.

Under the revised articles of association, Uganda holds veto rights over pipeline tariff changes, the appointment or removal of the managing director, issuance of new share capital, revisions to dividend policy, material changes to the business plan, and amendments to the company's governing documents.

"These voting rights and concessions provide satisfactory guarantees and protections for the Government of Uganda's strategic interests of security of supply, affordability, and accessibility," Uganda's Minister of Energy Ruth Nankabirwa said at the time.

Uganda depends on KPC for over 95 per cent of its fuel imports, roughly 2.96 billion litres annually. Over half of fuel cargo through KPC's network is for export, with Uganda taking an estimated two-thirds.

The concessions have sparked alarm in Kenya.  "Giving Uganda veto power over Kenya's energy plans at a time of serious geopolitical risk is deeply concerning," Ken Gichinga, chief economist at Mentoria Economics, told The Standard previously.

He added that the government appeared too willing to cede ground to make the IPO a success, even where it compromised Kenya's energy sovereignty.

The Ugandan threat to walk away from the IPO, which would have denied the sale over Sh20 billion, forced Nairobi to yield to Kampala's demands and revise KPC's articles of association.

Dr Ggoobi is Uganda's Permanent Secretary and Secretary to the Treasury at the Ministry of Finance, Planning and Economic Development.

He holds a PhD in Economics from Walden University and a Master of Arts in Economic Policy and Planning from Makerere University.

He previously served as Senior Presidential Advisor on the National Economy and Senior Lecturer in Economics at Makerere University Business School. He chairs the East African Development Bank and the Economic Policy Research Centre, and sits on the board of the Bank of Uganda.

Eng Bateebe is Permanent Secretary of Uganda's Ministry of Energy and Mineral Development. She holds a Master of Science in Sustainable Energy Engineering from Sweden's Royal Institute of Technology and a Master of Science in Refinery Design and Operation from the University of Manchester. She previously served on the boards of the Uganda National Oil Company and Uganda Refinery Holding Company.

Eng Meshack Otieno Kidenda joined Kenya's Roads Department in 1979 and served as the first Director General of the Kenya National Highways Authority from 2008 to 2014. He holds a Bachelor of Science in Civil Engineering from the University of Nairobi and a Master of Science in Traffic Engineering from the University of Birmingham.

Samson Kipkemboi Burgei is a public sector finance professional with three decades of experience in public financial management and central banking. He holds a Bachelor of Arts in Economics from the University of Nairobi.

 Ronald Kenyanya Nyamosi serves as General Manager, Finance and Investments, at Kenya's National Social Security Fund, overseeing the Fund's investment operations and property portfolio.

President William Ruto, speaking at the bell-ringing ceremony for KPC's listing on the Nairobi bourse, sought to downplay concerns, calling the participation of Kenya's neighbours a sign of deepening regional integration.

"Equally significant is the participation of the Governments of Uganda and Rwanda, investments that strengthen Kenya Pipeline Company as a strategic regional enterprise and reflect the deepening economic integration within the East African Community," Ruto said.

KPC board chair Faith Boinett echoed the sentiment: "To our brothers and sisters across East Africa who took up a stake in KPC, welcome home. The pipeline that serves your economies is now partly yours."

But with Uganda now holding veto power over Kenya's fuel pipeline and the appointment of its chief executive, analysts say the question is whether this marks genuine regional integration or a strategic takeover by a neighbour that has repeatedly clashed with Nairobi over energy policy.