Uganda National Oil Company (UNOC) has assumed full responsibility for the importation of petroleum products, marking a significant shift in the nation's energy landscape.
This transition comes in the wake of President Yoweri Museveni's endorsement of the Petroleum Supply (Amendment) Bill, 2023, transforming it into the Petroleum Supply (Amendment) Act, 2023.
As part of the formal legislative process, the Act's announcement has been published in the December 1st , 2023, edition of The Uganda Gazette. The Uganda Gazette serves as the official government publication containing notices, declarations, supplements, bills, statutes, statutory instruments, and legal notices. It is a weekly publication accessible to the public.
With this development, UNOC now holds the exclusive role of importing petroleum products, which will subsequently be distributed to oil marketing companies (OMCs). Leading up to this pivotal moment, the Minister of Energy and Mineral Development, Honourable Ruth Nankabirwa, presented the Petroleum Supply (Amendment) Bill, 2023, in Parliament. During the Parliamentary proceedings, she justified the need to empower UNOC as the sole importer of petroleum products.
Following scrutiny of the bill by the Environment and Natural Resources committee on November 11th , 2023, it underwent the second and third reading before receiving Parliamentary approval. Honourable Nankabirwa emphasized that this legislation would fortify the government's ability to ensure a consistent supply of petroleum products, diversify supply routes, and shield Ugandans from fuel cartels that have historically influenced pricing, causing financial strain for citizens at the pump.
This governmental intervention was prompted by Kenya's policy shift from the Open Tender System (OTS) to Government-Government (G2G), a process deemed overly prolonged with numerous stakeholders whose profit margins could impact pump prices. Almost 90% of Uganda's petroleum imports currently traverse Kenya, accounting for approximately 2.5 billion liters valued at about US$2 billion annually.
In a statement dated November 5, 2023, President Yoweri Museveni questioned the existing practice, suggesting, "Why not buy from refineries abroad and transport through Kenya and Tanzania, cutting out the cost created by middlemen?"
He disclosed discussions with Kenyan President H.E. William Ruto and engagements with Tanzanian President. H.E. Samia Suluhu.
Moving forward, UNOC will import directly from an international oil company and supply to Ugandan OMCs, eliminating several intermediaries. A branch has been established in Kenya to facilitate collaboration with stakeholders such as the Kenya Pipeline Company (KPC), responsible for transporting petroleum products from Mombasa to in-land towns like Nairobi and Eldoret, where trucks pick up the supplies.
UNOC has proactively engaged with OMCs, providing them with insights into this transition and assuring them of punctual and sufficient deliveries. This exclusive importation marks an evolution of the bulk trading business, initiated by the company in March 2020 as a revenue source and a strategic move in preparation for future business opportunities arising from the refining of Uganda's crude oil.
The maiden delivery is expected in February 2024. END