Parliament has passed into law the Petroleum Supplies Amendment Bill 2023 giving Uganda National Oil Company (UNOC) powers to import all Petroleum products into Uganda, ending the dependence on Kenyan Government.
If assented to by the President, the move is expected enhance supply security, reduce pump prices, and generate additional revenue for UNOC to support infrastructure development, especially in the oil sector.
Emmanuel Otiam Otala, the chairperson of Environment and Natural Resources of parliament told MPs that the bill seeks to empower UNOC to be supplier of all imports to the licensed oil marketing companies of petroleum products for the Ugandan market for purposes of ensuring security of supply of petroleum products
“…lack of empowerment for UNOC to be sole importer and supplier of Uganda’s petroleum products has contributed to instability of petroleum product supply in Uganda, unpredictable pump prices, and financial stagnation for UNOC which has curtailed its business progress to improve petroleum product stock holding levels within the country, and to contribute to the competitiveness of consumer and retail pump prices,” he said.
In its report, the Committee noted that the inability to purchase directly from the refineries, leads to an extra markup on Uganda’s fuel from Kenyan companies, insecurity in supply for petroleum products, and inability to directly negotiate for petroleum prices with refiners which inevitably contributes to high and unpredictable pump prices.
The committee in their investigation also discovered that the petroleum supply chain currently imposes three layers of middlemen from the overseas refinery to the Ugandan oil marketing companies, with companies include Aramco, Adnoc, and Enoc as the first layer traders from the overseas refineries. Companies that constitute the second layer include Galana, Gulf, and Oryx Kenya.
The third layer includes Total, Vivo, Stabex, Rubis, and city oil and Hass, which then supply to the Ugandan importer oil marketing companies.
“Each of these companies infuses a profit margin which is ultimately fed into the final pump price,” the report indicated.
Energy Minister Ruth Nankabirwa said the Bill will enable the government to ensure steady supply of petroleum products, and also diversify supply routes.
UNOC will exclusively source petroleum products from Vitol, a Swiss-based Dutch global energy and commodities giant. The duo signed a supply contract in August which was later ratified by Cabinet.
Uganda National Oil Company recently negotiated a five-year contract with Vitol Bahrain E.C.
According to Nankabirwa, Vitol Bahrain E.C will be financing the business by providing a working capital facility backed by its global balance sheet and working with UNOC to ensure competitive pricing of petroleum products.
Vitol Bahrain E.C. reportedly committed to financing the construction of additional capacity in partnership with UNOC of 320 million litres at Namwambula, Mpigi.
The Minister insisted that Oil Marketing Companies (OMCs) will continue selling the products to consumers through their commercial arrangements and the retail fuel pumps.
MP Alioni Yorke Odria said the Bill should be supported to save Ugandans from fuel cartels that arbitrarily influence fuel pricing, and cause pain at the pump for citizens.