Government imports 170 million litres of fuel as UNOC takes over

The cargo ship (MT NAVIG8 MARTINEZ-) carrying 80m litres of petrol that belongs to Uganda National Oil Company (Unoc) on July 3 arrived at Mombasa port, with another vessel named MT SINBAD carrying 90 million litres of diesel expected to arrive at the same port on July 4.

Unoc said in a press statement yesterday that the arrival of this shipment, “marks a significant milestone for Uganda as the first vessel under UNOC’s new mandate as the sole importer of fuel products”.

This, the state-owned agency in charge of handling its commercial interests in the petroleum sector, said is a historic event that “emphasises our commitment to ensuring the reliable supply of high-quality fuel”.

“As a result of this mandate, we will ensure the elimination of speculative price hiking. Through our new mandate as the sole importer of fuel products to Uganda, our role will be to ensure reliable supply and price stability. By centralising importation, we are streamlining operations and mitigating supply chain risks. This strategic move guarantees consistent, high-quality fuel for Ugandans,” the statement further said.

According to the statement, the ship arrived from Jebel-Ali, United Arab Emirates, with 58,000 metric tonnes of petrol and the second ship from Kuwait is expected today.

“The fuel will be discharged into the Kenya Pipeline Company infrastructure, delivering it to Eldoret, Kisumu and Nakuru in Kenya. Fuel tankers will, thereafter, deliver it to Uganda and should be available next week,” the statement added.

While receiving the consignment in Mombasa yesterday, Ms Ruth Nankabirwa, the Minister of Energy and Mineral Development, expressed the government’s commitment towards strengthening the supply of the products in Uganda.

“I wish to assure the Government of Kenya that my ministry, with the support of the Attorney General of Uganda, has guided and supported Unoc to negotiate the supply arrangement with Vitol Bahrain and all related agreements to facilitate the implementation of the policy change have been cleared by the Hon. Attorney General,” she said.

Through implementing this policy, the government, she said, has through Unoc, learnt some good lessons, and enhanced the understanding of officials on the challenges faced in the importation of petroleum products. These, she noted, included the prolonged negotiations that resulted in the achievements that were made yesterday.

Unoc Board Chairperson Mathias Katamba said: “We will continue to strive for excellence and work towards brighter, more prosperous future of our region, cooperation in trade and other productive endeavours.”

The Kenya Principal Secretary for the State Department for Petroleum, Mr Mohammed Liban, said the Kenyan Government would continue supporting Uganda in her petroleum importation plan.

Unoc said they are additionally working with their partner vitol to ensure the availability of buffer stocks to be used in case of supply disruptions.

“Regular supply is expected to lead to stability in the market. Unoc will continue to ensure supplies via Tanzania as an alternative route,” the statement added. 

The difference between the old now phased out arrangement with the new one is that before, Uganda was attached to the Kenya’s open tender system whereby the Kenyan government would float a tender and only Kenyan companies were allowed to participate and the one with the lowest bid would win a tender to supply all the petroleum products for both Uganda and Kenya oil companies.  

The winning Kenyan company would then import the fuel products from international bulk suppliers on behalf of Uganda, add their markup and sell to Uganda oil marketing companies. In 2023, Uganda made it a top priority to have energy independence by detaching itself from Kenya’s system to the one that was formed out of joint venture between Unoc and vitol group.

Reliable sources from the ministry of Energy, who asked to remain anonymous because of sensitivity of the matter, said this intervention by Unoc to exclusively import petroleum products for Uganda will not increase the current pump price but may also not lead to its reduction either because Unoc isn’t going to retail oil products in Uganda.

A source said: “Unoc is in this to ensure stability of the stocks and supply of products unlike before, there won’t be unexplainable shortages of products on pumps stations because now the government is in charge of what to buy and when to buy it since it has gained energy independence for the first time.” 

“In fact President Museveni has already directed that Unoc create the energy fund where the profits made from this deal will be saved to facilitate the development of oil-related infrastructure projects of the ministry. So this whole policy oil import shift didn’t give Unoc powers to set pump price for the Uganda’s oil marketing companies but rather was to ensure instead of Kenyan oil companies representing Uganda, Unoc be the one to do that role and earn the money that is attributed to brokerage between Ugandan oil marketing companies and intentional bulk oil trading companies,” another source said.