Uganda’s President Yoweri Museveni through the Ministry of Energy and Mineral Development in Uganda has announced that it is ditching its petroleum purchase deal with Kenya.
In a statement on Tuesday, October 31, the ministry indicated that Uganda imported more than 90 percent of its petroleum products through the Mombasa port and the Dar-es-Salaam port in Tanzania.
However, because of the government-to-government deal initiated by President William Ruto, to replace the Open tender System, Uganda’s Oil Marketing Companies (OMC) were sidelined in Kenya.
Moreover, the statement indicated that the move by the Kenyan government led to an increase in fuel prices in Uganda because the Ugandan oil marketing companies bought fuel at higher prices.
Because of that, the Yoweri Museveni led government stated that the fuel prices in Uganda also increased.
“It exposed Uganda to occasional supply vulnerabilities where the Ugandan OMCs were considered secondary whenever there were supply disruptions.
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“These vulnerabilities posed additional challenges, resulting in Uganda receiving relatively costly products and ultimately impacting the retail pump prices,” the statement read in part.
Uganda Makes Fresh deal with Tanzania
Earlier on October 23, Uganda’s cabinet approved the amendment of the Petroleum Supply Act, 2003 through the Petroleum Supply (Amendment) Bill, 2023 and has transmitted the bill to Parliament for approval.
Under the amendment bill, the government mandated Uganda National Oil Company Limited to source and supply the petroleum products to the licensed Oil Marketing Companies.
“Therefore, the OMCs will continue selling the products to consumers through their commercial arrangements and the retail fuel pumps,” added the directive.
At the same time, to guarantee the supply of the petroleum products, the government of Uganda stated that they will have stocks in the country and in Tanzania in case of any disruptions.
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“To guarantee the security of supply, the partnership has ensured that there will be buffer stocks in Uganda and Tanzania to be called upon should there be supply disruptions to the Country.
“The Ugandan government remains in active dialogue with the Government of Kenya for a seamless implementation of the policy change. Both nations share a commitment to regional stability and economic growth,” noted the statement.
Museveni New Directive Over Fuel
Following the above-mentioned resolutions, the government of Uganda intends to achieve the following after the amendment of the bill.
First, to mandate the Uganda National Oil Company to import petroleum products for the Ugandan market and authorize the Minister, with the approval of the Cabinet, to nominate any other person to import petroleum products for the Ugandan market.
Additionally, to improve security of supply of petroleum products for the Country and contribute to the reduction of the pump prices by eliminating unwarranted transactions in the supply chain.
