This bond is a security deposit to cover taxes if the fuel is sold locally instead of it being transported to Uganda. The higher bond fee at the Vitol Tank Terminal in Mombasa is expected to increase the Uganda National Oil Company’s (Unoc) costs, potentially preventing a reduction in fuel prices for Ugandans.

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According to The East African, Uganda’s Energy and Mineral Resources Minister Ruth Nankabirwa said Kenya’s increased requirement on the size of bond fees at the Vitol Tank Terminal International (VTTI) storage facility in Mombasa poses a bottleneck to Uganda’s hopes of lowering pump prices.

The report added that banks issuing the bonds would likely take time to increase the amounts to reflect the new bond fees, leading to more time demurrage charges passed to consumers in Kampala.