The Minister of Energy, Ruth Nankbirwa, presented the Petroleum Supply (Amendment) Bill, 2023, to Parliament for its First Reading. If passed, the bill will confer Uganda National Oil Company (UNOC) the exclusive authority to supply imported petroleum products to licensed oil marketing companies, stirring debates and concerns in the legislative assembly.
The proposed legislation has raised apprehensions about the establishment of a monopoly, although the Ministry of Energy has emphasized that the aim is to grant UNOC exclusive authority without establishing a monopoly. The Ministry contends that this move aims to enhance UNOC’s competitiveness on the global stage and benefit the Ugandan populace.
However, critics, including various private players in the industry, express worries that the alteration in policy might significantly affect their businesses. Among the dissenting voices is Mahathi Infra (U), a company that has been transporting oil via tanker ships on Lake Victoria, expressing concern that the proposed changes might negatively impact their investments in the fuel importation sector.
The Ministry defended its collaboration with Vitol Bahrain E.C, describing it as a robust partner with a considerable turnover. Reportedly, Vitol Bahrain E.C is committed to supporting UNOC’s capacity-building and providing a working capital facility for financing. The proposed partnership also aims to construct additional capacity in Namwambula, Mpigi, with a significant commitment from Vitol Bahrain E.C.
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Nankabirwa highlighted the intention to reduce reliance on external suppliers, streamline importation processes, and eliminate unnecessary transactions in the supply chain to make petroleum products more affordable for consumers. The proposed amendment seeks to empower the Minister of Energy to nominate other entities for petroleum product imports and enhance supply security, ultimately aiming to reduce pump prices and generate additional revenue for UNOC.
The bill’s proponents believe that assigning UNOC the responsibility of importing petroleum products will enhance the country’s supply security and potentially mitigate fuel shortages, contributing to reduced pump prices by streamlining the supply chain. The government also hopes this involvement will provide additional revenue to finance infrastructure projects that UNOC holds an interest in on behalf of the State.
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Uganda, being a net importer of petroleum products, faces supply challenges, mostly through the Mombasa and Dar-es-Salaam ports in Kenya and Tanzania, respectively. The proposed legislation aims to reshape the importation structure by designating UNOC as the central supplier to licensed oil marketing companies, altering the dynamics of fuel importation and regulation in the country.
