Uganda plans to use part of a proposed $2bn loan backed by global oil trader Vitol Bahrain E.C. (VBA), to the Uganda National Oil Company (UNOC), to acquire a stake in the Kenya Pipeline Company (KPC), according to a finance ministry brief submitted to parliament.

The move comes as Kenya prepares to divest up to 60% of the state-owned pipeline operator through an initial public offering (IPO). President William Ruto has confirmed the privatisation drive, which aims to raise about KES60bn ($460mn) while maintaining a strategic government holding.

KPC is a wholly state-owned midstream operator responsible for Kenya’s refined-products pipeline system, storage depots and related infrastructure. It plays a central role in supplying petroleum products to landlocked East African markets, including Uganda, Rwanda, Burundi and eastern Democratic Republic of Congo (DRC).

In its submission to lawmakers, Uganda’s Ministry of Finance said the borrowing would support critical oil-sector investments, including the acquisition of equity in KPC, infrastructure Uganda has long relied on for fuel imports via Kenya’s Mombasa port. Industry data cited by officials indicate that Uganda imports the vast majority of its refined fuels through Kenya, accounting for roughly 90% of national petroleum demand.

Beyond the KPC purchase, the funds are earmarked for expanding fuel storage, pipeline infrastructure and refinery projects. The borrowing will be undertaken by the Uganda National Oil Company (UNOC), which manages the country’s commercial interests across the petroleum value chain.

The ministry described Vitol’s role as providing a financing-backed facility rather than taking an equity position. Repayments are expected to be secured against revenues from fuel sales and future oil-related projects, as Uganda prepares to begin commercial crude production later this decade from fields in the Albertine Graben.

KPC operates more than 2,740km of pipeline linking Mombasa to Nairobi and western Kenya. The network is critical to East Africa’s fuel logistics, moving several million tonnes of refined products annually and underpinning supply to inland markets.

Ruto has encouraged East African participation in the IPO, framing KPC as a regional asset underpinned by cross-border demand. “I want to encourage Ugandans and East Africans to equally invest,” he said during a recent visit to eastern Uganda, noting that shares would be available to public entities and private investors across the region.

Ugandan finance officials said acquiring a stake in KPC would strengthen Kampala’s influence over fuel-supply logistics and align with broader East African Community integration objectives, at a time when global financing for fossil-fuel infrastructure has tightened amid the energy transition.