Shipping company protests Vitol monopoly to supply Uganda petroleum products
Fuel trucks destined for Uganda queue at Matayos Town on the Kisumu-Busia highway awaiting clearance into Uganda on October 12 in 2021. Expert warn that government’s move to grant a monopoly to Vitol to supply all petroleum products to Uganda will result in an increase in the prices of oil products. PHOTO | FILE
What you need to know:
- The responsibility of Maersk Line Limited, Dr Kananura explained, would be to avail financing and shipping of the petroleum products, adding that if UNOC engaged with multiple suppliers, the price of fuel would be cheap.
- The interface comes at a time when the committee is scrutinising the Petroleum Supply (Amendment) Bill, 2023 which seeks to amend certain provisions of the Petroleum Supply Act, 2003 by among things empowering UNOC to import petroleum products for the Ugandan market and contribute to the reduction of the pump price by eliminating unwarranted transactions in the supply chain.
A shipping company with an interest in the oil sector wants inclusion in the deal to supply Uganda National Oil Company (Unoc) with petroleum products.
Unoc under a proposed plan is, next year expected to source all petroleum products exclusively from Swiss-based Dutch energy trader, Vitol, a development that has divided a section of some business owners in the country.
Appearing before Parliament’s Environment and Natural Resources Committee on Wednesday, a team from Maersk Line Limited serving under the name HEK International Limited protested the idea of monopolising the importation of petroleum products by allowing Unoc to become a sole supplier of petroleum products through a monopolised Swiss-based Dutch energy trader, Vitol.
“We don’t find the arrangement to provide for suppliers necessary because if Unoc engaged with multiple suppliers, the price of fuel would be cheap,” said Dr Rogers Mugambwa Kananura, the technical advisor for Maersk Line in Uganda, adding, “We don’t support the decision to create a monopoly...we find that we can compete favorably.”
The responsibility of Maersk Line Limited, Dr Kananura explained, would be to avail financing and shipping of the petroleum products, adding that if UNOC engaged with multiple suppliers, the price of fuel would be cheap.
Members of the Committee led by Chairperson Mr Emmanuel Otaala (West Budama South County) pondered what specific value they wanted to add to UNOC.
“Give us a comparison between you and Vitol to show that you would provide a better service,” Mr Otaala asked.
Dr Kananura, in response, simply said: “It would be risky to put your eggs in one basket.”
Background
The interface comes at a time when the committee is scrutinising the Petroleum Supply (Amendment) Bill, 2023 which seeks to amend certain provisions of the Petroleum Supply Act, 2003 by among things empowering UNOC to import petroleum products for the Ugandan market and contribute to the reduction of the pump price by eliminating unwarranted transactions in the supply chain.
While tabling the Bill last month at Parliament, Energy Minister Ruth Nankabirwa assured lawmakers that Vitol would deliver beyond the country’s expectations after signing a five-year supply contract with UNOC.
Attorney General Mr Kiryowa Kiwanuka on Tuesday defended the Bill before the Committee stating that the partnership of Vitol and Unoc is to rubber stamp finances for the purchase of refineries.
Committee Members have however continued putting the government on the spot with concerns about whether dealing with one company includes discouraging healthy competition with other competent companies. will not discourage competition.
In circumstances where the contracted supplier fails to deliver, the Energy Minister, in the proposed amendments, has been empowered, with the approval of the cabinet, to nominate any other person to import petroleum products for the Ugandan market.
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