Uganda To Cease Sourcing Fuel Products From Kenya Over Deal with the Gulf
A bill set to be introduced in Uganda’s National Assembly that will reduce the country’s dependency on fuel imports from Kenya has been approved by the cabinet.
The proposed bill will give the Uganda National Oil Company (UNOC) the responsibility of locating and bringing in petroleum products for the East African country’s oil marketing corporations (OMCs).
Uganda’s Energy Minister Ruth Nankabirwa Ssentamu said that the country has experienced high pump prices and supply issues in recent months as a result of Kenya’s government-to-government oil agreement with Saudi and United Arab Emirates (UAE) companies.
“Despite the price-competitive nature of the Open Tender System in Kenya and its relatively normal supplies, it exposed Uganda to occasional supply vulnerabilities where the Ugandan OMCs were considered secondary whenever there were supply disruptions,” Dr Ssentamu said.
“These vulnerabilities paused additional challenges, resulting in Uganda receiving relatively costly products and ultimately impacting the retail pump prices.”
Uganda claimed that the Mombasa Port receives 90.0% of Uganda’s petroleum product imports, with Dar es Salaam handling the remaining portion.
Kenyan OMCs supply fuel to their affiliates in Uganda, where it is marketed. The ministry now wants UNOC to locate the goods and provide local OMCs with them.
Should the bill be passed, Kenyan OMCs that have stores in Uganda will suffer as they would be forced to enter into a different import agreement with UNOC.
“The Uganda National Oil Company (UNOC) will be responsible for sourcing and supplying petroleum products to the licensed Oil Marketing Companies (OMCs) involved in importing the products to Uganda,” added the minister.
“Therefore, the OMCs will continue selling the products to consumers through their commercial arrangements and the retail fuel pumps.”
UNOC has also entered into a partnership with Vitol Bahrain E.C, a Bahraini corporation that will continue to have reserves in Tanzania and Uganda, thereby reducing the amount of goods passing through Kenya.
“To guarantee the security of supply, the partnership has ensured that there will be buffer stocks in Uganda and Tanzania to be called upon should there be supply disruptions to the country. The Partner has also committed to finance the construction of additional capacity in partnership with UNOC of 320 million litres at Namwambula, Mpigim,” Ssentamu added.
Kenya signed an agreement to stop using the Open Tender System in April of this year with four Gulf suppliers: Saudi Aramco, Emirates National Oil Corporation (Enoc), Abu Dhabi National Oil Corporation Global Trading (Adnoc).