UNOC For Fuel Monopoly as Parliament Passes Petroleum Supply Bill 2023

The Uganda National Oil Company will enjoy a monopoly for supplying petroleum products in Uganda after Parliament passed into law the Petroleum Supplies Amendment Bill 2023 .

This new law also give the Minister discretionary powers to appoint any other fuel supply should UNOC run short of capacity a development experts have criticized that it will be abused given the corruption tendencies in many government establishments .

However the law makers agreed with government’s chief legal adviser -the Attorney General that If assented to by President Yoweri Museveni, the new law will enhance supply security, reduce pump prices, and generate additional revenue for UNOC to support infrastructure development, especially in the oil sector.

Emmanuel Otiam Otala, the chairperson of Environment and Natural Resources of parliament told MPs that the bill seeks to empower UNOC to be supplier of all imports to the licensed oil marketing companies of petroleum products for the Ugandan market for purposes of ensuring security of supply of petroleum products

“Lack of empowerment for UNOC to be sole importer and supplier of Uganda’s petroleum products has contributed to instability of petroleum product supply in Uganda, unpredictable pump prices, and financial stagnation for UNOC which has curtailed its business progress to improve petroleum product stock holding levels within the country, and to contribute to the competitiveness of consumer and retail pump prices,” he argued before a vote was called by the Speaker Anita Among and the ayes took it.

The Committee pointed out that the government’s inability to purchase oil products directly from the refineries had led to an extra markup on Uganda’s fuel from Kenyan companies (read middlemen), insecurity in supply for petroleum products, and inability to directly negotiate for petroleum prices with refiners which inevitably contributes to high and unpredictable pump prices. This after President Museveni not long ago fumed about the high pump prices caused by what he said were middlemen in Kenya .

It seems the President was acting on intelligence information that the current petroleum supply chain created three layers of middlemen from the overseas refinery to the Ugandan oil marketing companies, with companies include Aramco, Adnoc, and Enoc as the first layer traders from the overseas refineries. Companies that constitute the second layer include Galana, Gulf, and Oryx Kenya.

The third layer includes Total, Vivo, Stabex, Rubis, and city oil and Hass, which then supply to the Ugandan importer oil marketing companies.

“Each of these companies infuses a profit margin which is ultimately fed into the final pump price,” the members of parliament noted .

Energy Minister Ruth Nankabirwa said the Bill will enable the government to ensure steady supply of petroleum products, and also diversify supply routes.

UNOC will exclusively source petroleum products from Vitol, a Swiss-based Dutch global energy and commodities giant. The duo signed a supply contract in August which was later ratified by Cabinet.

Uganda National Oil Company recently negotiated a five-year contract with Vitol Bahrain E.C.

According to Nankabirwa, Vitol Bahrain E.C will be financing the business by providing a working capital facility backed by its global balance sheet and working with UNOC to ensure competitive pricing of petroleum products.

Vitol Bahrain E.C. is said to have committed to financing the construction of additional capacity in partnership with UNOC of 320 million litres at Namwambula, Mpigi.

MP Alioni Yorke Odria said the Bill should be supported to save Ugandans from fuel cartels that arbitrarily influence fuel pricing, and cause pain at the pump for citizens.

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