Kenya will finally license the Uganda National Oil Company (Unoc), ending months of a major feud that spilled over to the regional court and hurt diplomatic ties between the two countries.

Energy Cabinet Secretary Davis Chirchir on Wednesday said that work is in progress to issue a permit that will allow Unoc to import fuel directly through Kenya Pipeline Company (KPC).

“You will see Unoc getting a licence and then we will see how to work together because usage of our pipeline is an opportunity for us,” Mr Chirchir said.

“They will employ Kenya Pipeline Company’s infrastructure so there will be no loss of opportunity, the transporter will remain to be KPC. We are working closely with Uganda to resolve the challenge.”

The CS’s revelations came days after a case filed at the High Court in Machakos to block the licensing of Unoc was withdrawn. Sources said the licence is likely to be issued next month. The licensing could end the dispute and allow Unoc to buy fuel from Vitol Bahrain.

Uganda went to the regional court in December last year to fight for the licence that would allow the use of KPC's infrastructure. The case is yet to be determined but issuing the license is likely to end the case at the regional court as the two countries move to avert a diplomatic fallout.

Unoc’s move to start importing fuel directly from Vitol Bahrain will hit the revenues of local oil marketing companies that have for decades supplied Uganda. Unoc has over the years been primarily supplying fuel to State-owned entities in Uganda but is now set to start selling to private oil marketers.

Uganda kicked off plans for the direct imports deal through Unoc months after Kenya announced an agreement with the Gulf majors to import fuel on a 180-day credit period to ease dollar demand and prop up the shilling.