Parliament has passed into law the Petroleum Supplies Amendment Bill 2023, giving the Uganda National Oil Company (UNOC) the monopoly to import all petroleum products into Uganda.
In a session chaired by Speaker Anita Among on Tuesday, 14 November 2023, majority of the legislators approved the recommendations of the Committee on Environment and Natural Resources that the Petroleum Supply Amendment Bill, if passed into law, will improve petroleum product stock holding levels within the country, and to contribute to the competitiveness of consumer and retail pump prices.
Committee chairperson Emmanuel Otaala explained how Uganda has been exploited by middle men in the petroleum business.
“…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,” he said.
The committee chair said the object of this Bill is to amend the Petroleum Supply Act, 2003, 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.
“The system currently imposes 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,” Mr Otaala added.
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 lmporter oil marketing companies. Each of these companies infuses a profit margin which is ultimately fed into the final pump price,” he added.
He further explained that the committee noted that inability to purchase directly from the refineries, leads to an extra markup on Uganda’s fuel from Kenyan companies, insecurity in supply for petroleum products, and inability to directly negotiate for petroleum prices with refiners.
“This inevitably contributes to high and unpredictable pump prices,” Otaala said.
“The Committee recommends that in the long-term, UNOC should explore opportunities of direct engagement with the refineries. This shall minimize costs, and increase stability of petroleum product supply into the economy,” he added.
In addition, 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.
Sheema Municipality MP Dicksons Kateshumbwa also supported the Bill, saying the future will be to financially support UNOC so that they can buy directly from the refineries.
The Bill was eventually passed by the MPs.
Energy Minister Ruth Nankabirwa hailed the development, saying the Bill will enable government to ensure steady supply of petroleum products, and also diversify supply routes.
“The Bill will further enable Government to ensure steady supply of Petroleum Products, diversify supply routes and also save Ugandans from fuel cartels that arbitrarily influence fuel pricing, and cause pain at the pump for citizens,” she said.
Under the proposed arrangement, 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 last week.
Ms Irene Batebe, the ministry permanent secretary recently said that Vitol has been supplying these products to UNOC for some time.
“VITOL has been a UNOC supplier of bulk petroleum products for more than a year, having gone through a competitive process in 2021. Other existing UNOC suppliers include Galana, Texas, Hass and Dalbit,” she said.
Two separate meetings were held on Tuesday October 26 and Monday October 30 between government and OMCs under their umbrella body of the Sustainable Energies and Petroleum Association (Sepa) to discuss the plan before its tabling yesterday.