Museveni backs plan on sole fuel importer

President Museveni has agreed to the proposal by the government to empower the state-owned-Uganda National Oil Company (Unoc) to take over the importation of all petroleum products into the country.

Unoc, under the proposed plan, will starting January 2024, exclusively source all petroleum products from Vitol, a Swiss-based Dutch global energy and commodities giant, and then sell to more than 40 oil marketing companies (OMCs) in the country.

Energy Minister Ruth Nankabirwa last week tabled the Petroleum Supply Amendment Bill, 2023, which seeks to amend certain provisions of the Petroleum Supply Act, 2003, to unlock the process.

Mr Museveni in his letter  posted on X, formerly Twitter,  yesterday, wondered why Ugandan oil marketing companies were without his knowledge, buying huge quantities of petroleum products from middlemen in Kenya.

“A whole country buying from middlemen in Kenya or anywhere else!! Amazing but true,” he said.

“In a number of cases, these wonderful people really let down their country. Take the issue of importation of petroleum products. Uganda imports petroleum products of the magnitude of 2.5 billion litres per annum valued at about $2 billion ( Shs7.6 billion),” he added.

Background

Mr Museveni started championing Unoc’s takeover in February when he directed Ms Nankabirwa to fast-track the changes in the policies and spearhead the entire process.

He reiterated that ring-fencing oil imports for Unoc will provide financial benefit to the country by opening up a new revenue stream.

One of the reasons for establishing Unoc, he said, was to help the government improve its “products’ stock-holding levels within the country and subsequently contribute to the stabilisation of consumer and retail fuel prices”.

His decision by then was based on Kenya’s planned move of abandoning the Open Tender System (OTS) in favour of the Government to Government (G-to-G) system, which the latter implemented in April.

Under OTS Kenyan oil marketing companies would source petroleum products from suppliers and later sell to their Ugandan counterparts, unlike the current G-to-G where the Kenyan government directly sources from Gulf oil companies and then supplies to private firms who also sell to their Ugandan counterparts.

President’s concerns

Mr Museveni yesterday wondered why the importers were/are not buying directly from the refineries abroad and transporting through Kenya and Tanzania to cut out the cost created by middlemen.

Kenyan oil marketing companies, for example, he said, few months ago sold a tonne of diesel to Ugandan importers at $118 (Shs 444,000) compared to the $83 (Shs313,000) charged by bulk suppliers or refiners, petrol at $97.5  (Shs367,000) per tonne compared to $61.5  (Shs232,000)  of refiners or bulk suppliers and Kerosene at $114 (Shs    429,000) per tonne compared to $79 (Shs298,000)  charged by bulk suppliers or refiners.

Mr Museveni said he knew about this a few years ago from a whistleblower and directed then Energy minister Gorretti Kitutu to handle those who never did so.

“We have now contracted bulk and refinery suppliers able to give us the lower prices. I have discussed this with H.E  [William] Ruto, the President of Kenya;  and our delegation is now in Dar-es-Salaam, discussing with Her Excellency Samia Suluhu,” he said.

Mr Museveni added: “However, the internal parasites who have been cheating their country, have launched a social media and mainstream media campaign against our liberation- resistance plan against okuseerwa  (being over-charged).”

Promises

Ms Nankabirwa last week while tabling the Bill to Parliament assured legislators that Vitol, with whom Unoc has signed a five-year supply contract, will deliver beyond the country’s expectations.

“The partner 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. 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,” she said.

The proposed amendments further empower the Energy minister to nominate another company who will supply in case Unoc fails to deliver.

Mr Museveni assured East Africans that there would be competitive petroleum products, free of distributions caused by middlemen, and “The whole of Uganda, North- Western Tanzania, Rwanda, Burundi, Western Kenya, South Sudan and Eastern DRC, will benefit”.