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Fuel players set terms for storage facilities
A pump attendant fills a car with fuel in Kampala. File Photo
What you need to know:
- Plans. The fuel player now with over 190 sites says it will continue to invest in growing its distribution network and leveraging on partnerships such as Kuku Foods (KFC) to provide improved services and convenience to its customers.
Whereas there is evidently improved demand to the sector, coupled with overall economic growth at 6 per cent in the country, delays in commercial production of oil could be inhibiting anticipated growth in demand for fuel products, Mr Hansen noted.
Fuel distributor, Vivo Energy, has welcomed government’s initiative to construct fuel storage terminals meant to channel inland fuel products through Lake Victoria saying it could mean reduced cost of doing business as well as curtailment to end user costs on fuel.
The fuel company, however, highlighted terms that need to be addressed before any activity can take place.
“There are quite a number of constraints that these operators and developers have to overcome for us to be able to work with them. Because our standards when it comes to environmental protection and oil spills are very stringent,” Mr Gilbert Assi, managing director Vivo Enegry Uganda, says adding that; already, the company is engaging government to inform them of their needs if they are to use the facilities.
Uganda, through a consortium of investors, Mahathi Infra Uganda Limited, is nearing completion of the 70m-litre fuel storage tanks at Kawuku on the shores of Lake Victoria.
The $270m fuel storage tank is expected to be commissioned this year in April.
According to the Parliamentary Committee report on Natural Resources on the ministerial policy statements and budget estimates for the FY2019/20, Uganda still relies on fuel stocks from the 30 million-litre Jinja-based storage facility and other privately owned facilities for her fuel requirements.
However, the country has suffered tremendously at the hand of low fuel reserves yet the country’s fuel path is through Kenya’s Mombasa Port.
This is because whenever turmoil rocks the towns of Kenya especially through elections, Uganda’s fuel prices spike.
The fuel distributor noted that there is a high potential to transport multiple items through the underutilised water transport in Uganda.
Mr Paul Hansen, Executive Vice President of East and Southern Africa Vivo Energy, said the move is especially timely since Kenya Pipeline Company last year increased its capacity by opening another part of the pipeline which proves favorable to sector players.
Commenting on the sector performance, Mr Assi noted that market demand for fuel grew by 5 per cent from 2018 to 2019.
However, challenges such as currency depreciation, high cost of money, and lack of stringent regulation of the sector inhibits its operations.
Market share
Vivo Energy which acquired Engen last year claims that it is currently the market leader with 22.7 per cent of the fuel market share closely ahead of Total with 19.6 per cent owned by Total Uganda.
Close to 9 per cent is shared amongst Gapco, Oryx, Kobil and Mogas, the independent suppliers take charge of over 49 per cent market share.
While Vivo maintains it has the stronghold of the retail market share leading with 20.6 per cent coming slightly ahead of Total with 16 per cent, independents still take a chunk of the retail market with over 55 per cent.
According to Mr Assi, the likes of Vivo and Total among other players have lost almost 2 per cent of market share to the independents.
“What we are looking forward to, is to have an environment where everybody abides by the laws and is committed to both the international and local standards,” he noted.
