How does fuel get to the pump?
Fuel pump prices at Shell Mulago in Kampala as of July 07. Analysts say the pump price of both petrol and diesel that had in recent times dropped below Shs5,000, are widely expected to shoot up. PHOTO/MICHAEL KAKUMIRIZI
What you need to know:
- Per the Energy Ministry, Uganda consumes 6.5 million litres of petroleum products daily, with 4,599 licensed retail fuels stations dotting the country as of September 2023
Per the Energy Ministry, Uganda consumes 6.5 million litres of petroleum products daily, with 4,599 licensed retail fuels stations dotting the country as of September 2023.
How does Uganda replenish its stock of petroleum products?
A net importer of petroleum products, Solomon Muyita, the Energy ministry spokesperson, says Uganda assuages its appetite for the black gold with supplies “from countries like Saudi Arabia, United Arab Emirates and Singapore.” Ports in Mombasa, Kenya, and Dar es Salaam, Tanzania, are used to replenish supplies. 90 percent of the supplies come via the Northern Corridor thanks to an Open Tender System (OTS) that enables the country to get its share through Kenya Oil marketing companies (OMCs).
“We have been discussing and negotiating as an East African bloc. We get all our volume requirements and get one supplier to bid and then we give them the tender to supply in a given month,” Muyita revealed.
So what has changed?
Mr Anthony Ogalo, the general manager of the Sustainable Energies and Petroleum Association, says the government of Kenya (GoK) changed this process in April 2023 to the Government-to-Government (GtG) arrangement of supply of fuel into the East African region.
“This G2G arrangement is where the government of Kenya negotiated with companies like Saudi Arabia’s Aramco, Adnoc and Emirates National Oil Company (ENOC) to supply products into the region,” Ogalo disclosed, adding that, because the GoK does not have a trading arm to do this directly, it nominated OMCs within its borders to work with those external suppliers.
Owing to this, once the petroleum products get to the Mombasa port, they are taken through the Kenya pipeline infrastructure and transported to Western Kenya where there are a number of loading points. It’s here that the Ugandan OMCs pick their products, including Kisumu, Nakuru and Eldoret.
Are all the products transported via the Northern Corridor?
No. Others are delivered to Uganda from Kisumu to Kawuku in Uganda via Lake Victoria using a marine vessel (barge) run by Mahathi Infra company. The company’s director Capt Mike Mukula says they have a storage capacity of approximately 70 million litres, with14 tanks.
“We can also bring in through the logistics arrangement 4.5 million litres using one barge and the second one will be ready on November 10,” he said.
What about the storage capacity?
The Government of Uganda (GoU)uses its Jinja-based fuel reservoirs with a capacity of 30 million litres. Mr Muyita also says the GoU “secured land in Mpigi to set up 320 million litre storage terminals.”
How many players are involved in this sector?
Per Capt Mukula there are approximately 170 OMCs in Uganda. The market share is, however, controlled by three key companies with a 46 percent stake of the oil supply chain and distribution in the country.
Mr Ogalo adds that, among the licensed importers, there are those who do not have a network in Uganda and have an opportunity to sell to those who do not have import licences.
Effective January 2024 , the GoU through the Uganda National Oil Company (Unoc) is set to get petroleum products from international suppliers directly.
This comes after the Ugandan Cabinet recently ratified a five-year supply contract between Unoc and Vitol, a Swiss-based Dutch global energy and commodities giant.
The GoU is optimistic that the new policy will not only help stabilise prices but also ensure fuel security.
