MPs Challenge UNOC’s Exclusive Role in Petroleum Imports

Budadiri West MP Nandala Mafabi has urged the government to allow the Uganda National Oil Company (UNOC) to participate in the importation and supply of fuel, competing with other companies. This plea was made during Mafabi’s address to the Parliament’s committee on natural resources and environment, which was reviewing the Petroleum Supply Amendment Bill, 2023. The proposed amendment aims to grant UNOC a monopoly in fuel importation.

Currently, Uganda relies on a system where fuel companies procure supplies through affiliated Kenyan firms, which import the products through the Mombasa port. The Energy Minister, Ruth Nankabirwa, disclosed the government’s intention to exclusively authorize Vitol, a global energy trader, for the supply of all petroleum products, ending the reliance on imports via Kenya. This move is intended to minimize supply disruptions and stabilize pump prices.

As part of this transition, UNOC and Vitol Bahrain E.C. have negotiated a five-year contract, with Vitol providing the necessary working capital. The Cabinet has approved amendments to the petroleum law, facilitating Vitol’s exclusive supply to UNOC.

However, MP Nandala Mafabi, supported by MP Eddie Kwizera, expressed reservations about granting UNOC a monopoly. They argue that in a liberalized economy, this contradicts Article 40 of the Constitution, safeguarding Uganda’s economic rights. Mafabi contends that such a move would violate the East African Competition Act of 2006, ratified by Uganda in 2011, and go against the spirit of the recently passed Competition Bill in Parliament.

Mafabi cites a precedent in the case of Spedag Interfreight Uganda Ltd & 3 Others Vs Attorney General & The Great Lakes Ports Limited, where the Constitutional Court ruled against granting monopoly status in the clearing and forwarding business, emphasizing the importance of maintaining a competitive environment. This decision highlighted that such monopolies contravene the principles of the East African Customs Union, promoting competition and free-market economies.

Article 40 of the Constitution, emphasized by Mafabi, underscores the right of every person in Uganda to engage in lawful occupations, trades, or businesses. MP Eddie Kwizera adds that UNOC should be allowed to trade fuel alongside other companies, drawing a parallel with the government’s involvement in various sectors where it operates alongside private entities.

Additional Reporting by: The Ankole Times

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