Govt Proposes UNOC as Sole Importer of Ugandan Petroleum Products

Kampala, Uganda | THE BLACK EXAMINER | Dr. Ruth Nankabirwa Ssentamu, the Minister of Energy and Mineral Development, has presented the Petroleum Supply (Amendment) Bill of 2023 to Parliament, with the aim of designating the National Oil Company as the exclusive importer of petroleum products in Uganda.

If this bill becomes law, it will grant the Energy Minister the authority to nominate companies for petroleum product imports, enhance the security of petroleum product supplies, and reduce fuel prices by eliminating unnecessary transactions in the supply chain.

Uganda currently relies on importing petroleum products, with over 90% of these imports arriving through the Mombasa port in Kenya, and the remaining portion through the Dar-es-Salaam port in Tanzania. These imports have been carried out independently by licensed Ugandan Oil Marketing Companies (OMCs) through the importation structures in Kenya and Tanzania.

Under the existing importation arrangements, Ugandan OMCs have been obtaining their import allocations for petroleum products through their affiliated Kenyan OMCs, which are registered and participate in the import structures in Kenya and Tanzania.

In April 2023, the Kenyan government changed its petroleum product import system by replacing the Open Tender System with a Government-to-Government importation arrangement involving the United Arab Emirates and the Kingdom of Saudi Arabia. This was done to address importation challenges faced by Kenya.

Although the Open Tender System in Kenya was cost-competitive and generally ensured a regular supply of petroleum products, it made Uganda vulnerable to occasional supply disruptions, relegating Ugandan OMCs to a secondary position in case of such disruptions. These vulnerabilities resulted in Uganda receiving more costly products, ultimately affecting retail fuel prices.

With the proposed amendment to the Petroleum Supply Act, Minister Nankabirwa’s Ministry of Energy and Mineral Development will retain its role of regulating the importation of petroleum products into Uganda. The ministry will work closely with the office of the Attorney General to formulate statutory instruments to implement the law effectively.

Under this amendment, the Uganda National Oil Company (UNOC) will be responsible for sourcing and supplying petroleum products to the licensed Oil Marketing Companies (OMCs) involved in importing these products to Uganda. OMCs will continue to sell these products to consumers through their existing commercial arrangements and retail fuel pumps.