Uganda Eyes Tanzania for Fuel Imports

Summary:

• Uganda is in talks with Tanzania for fuel imports after Tanzania denied a license to Uganda National Oil Corporation. Energy Minister Ruth Nankabirwa aims to negotiate tax reductions on fuel imports from Tanzania.

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Uganda has initiated discussions with Tanzania to enable the Uganda National Oil Company to handle and market fuel imports. This development follows Tanzania’s refusal to grant a license to the Uganda National Oil Corporation (UNOC) to operate as a local oil marketer.

Ruth Nankabirwa, the Minister of Energy and Mineral Development, confirmed that she conveyed a message from President Museveni to Tanzanian President Samia Suluhu Hassan. She highlighted the potential for negotiations with the Tanzanian government to alleviate some taxes on fuel imports, allowing Uganda to source fuel from Tanzania.

Nankabirwa also disclosed engagements with Kenyan President William Ruto and Energy and Petroleum Cabinet Secretary David Chirchir. However, a decision in favor of Uganda is pending. She emphasized ongoing efforts to enhance the security and efficiency of petroleum product supply, citing the amendment of the Petroleum Supply Act of 2008 and UNOC’s partnership with VITOL Energy Limited.

The fuel marketing dispute between Uganda and Kenya began in November the previous year when Uganda sought to register UNOC as a local fuel marketer, aiming to eliminate intermediaries in Kenya. The Ministry of Energy proposed an amendment to grant exclusive rights to UNOC for oil importation. UNOC collaborated with VITOL Energy Limited to directly import petroleum products.

Kenya’s Energy and Petroleum Regulatory Authority imposed conditions for UNOC’s license, leading to disagreement. Some Kenyans took the matter to court, and the High Court in Kenya is yet to rule on it. Uganda also filed a lawsuit against Kenya at the East Africa Court of Justice (EACJ) to compel the issuance of the license, with Kenya allegedly urging Uganda to withdraw the case.

The minister reiterated that Uganda’s decision for direct fuel importation aims to ensure the security of petroleum product supply. Despite legal challenges delaying UNOC’s importation commencement, Nankabirwa emphasized Uganda’s market-driven approach and the need for a competitive and well-supplied market. In 2023, Uganda’s petroleum consumption reached 2.5 billion liters, incurring a $2 billion expense, maintaining competitiveness despite a 7% annual growth in demand. A court ruling on the matter is expected on February 12th.