The Ugandan government has allowed private firms to import petroleum products to prevent shortages and price increases due to a standoff with Kenyan fuel traders.
Irene Batebe, the permanent secretary of the Ministry of Energy, told the media on Monday, January 1, 2024, that Uganda will continue to use the Kenyan importation system with the Ugandan Oil Marketing Companies (OMCs) confirming their import requirements through their affiliates in Kenya until the Government of Uganda secures clearance for UNOC importation from the Government of Kenya.
Last November, the Parliament passed the Petroleum Supply (Amendment), Bill 2023, giving the Uganda National Oil Company (UNOC) exclusivity to import and supply all petroleum products destined for the Ugandan Market
MPs said the Bill is timely in eliminating dependence on Kenyan brokers.
The Petroleum Supply (Amendment), Bill 2023 is aimed at eliminating the middlemen in the oil supply chain that are said to be the cause of fluctuations in oil pump prices.
UNOC is a government-owned company established to handle the government’s commercial interests in the petroleum sector.
“Uganda imports 90% of its petroleum products through Kenya and 10% through Tanzania. The system currently imposes three layers of middlemen from overseas refineries to Ugandan oil marketing companies. Each of the middlemen companies infuses a profit margin which is ultimately fed into the final pump price,” said Emmanuel Otaala, the chairperson of the Committee on Environment and Natural Resources, which scrutinized the Bill.
The committee observed that Uganda’s current inability to purchase oil directly from the refineries leads to an extra markup on Uganda’s fuel from Kenyan companies and insecurity in the supply of petroleum products which contributes to high and unpredictable pump prices.
If assented to, the Bill will build UNOC’s capital base as it will be able to negotiate fair prices for Uganda, an opportunity not enjoyed now.
MPs said the Bill is timely in eliminating dependence on Kenyan brokers who according to the committee findings, have adversely disadvantaged Ugandans in access to petroleum products timely and in the required quantities.
“Giving UNOC a monopoly is like strengthening our child, it is for our good that we get rid of middlemen who take the big portion of the profit,” said Stephen Baka (NRM, Bukooli County North).
Vitol company which was selected by shall finance the supply of petroleum products up to delivery points in Kenya on a non-immediate cash payment basis, to enable UNOC to pay after supplying the oil marketing companies within Uganda.
