Kampala, Uganda: In a bid to stabilize fuel supplies and prices, the Ugandan government has taken a step back from its recent plan to give the Uganda National Oil Company (UNOC) exclusive rights to import petroleum products. Private firms are now being allowed back into the market, following a standoff with Kenyan fuel traders.
This move comes after months of uncertainty caused by the Petroleum Supply (Amendment) Bill 2023, passed by Parliament last November. The bill aimed to establish UNOC as the sole petroleum importer, eliminating the role of Kenyan middlemen and their alleged influence on pump prices.
However, the controversial bill triggered a standoff with Kenyan authorities who threatened to halt fuel exports to Uganda. This raised concerns about potential shortages and price hikes. To avoid such a scenario, the government has opted for a temporary solution.
While UNOC continues its efforts to secure direct import clearances from Kenya, private oil marketing companies (OMCs) will be allowed to resume fuel imports through their Kenyan affiliates. This essentially reverts to the pre-bill system, with three layers of middlemen still involved.
Energy Ministry Permanent Secretary Irene Batebe assured the public that “Uganda will continue to use the Kenyan importation system” until UNOC’s direct access is established. This temporary workaround should alleviate worries about immediate fuel shortages or price spikes.
Why the Backtrack?
The Ugandan government’s decision highlights the delicate balance between promoting local companies and maintaining stable fuel supplies. While the long-term goal of building UNOC’s capacity remains, the immediate priority is ensuring uninterrupted access to affordable fuel for consumers.
The bill’s intention to eliminate middlemen and their profit margins resonated with many, but the potential disruption to fuel flow proved too risky. Private firms, with their existing established channels, offer a quicker and safer path to maintain fuel security in the short term.
Looking Ahead:
While the government navigates the complex process of securing direct import rights for UNOC, the return of private firms brings much-needed stability to the Ugandan fuel market. However, the ultimate goal of fostering domestic capacity and reducing dependence on foreign middlemen remains crucial. Balancing these priorities will be key to ensuring long-term fuel security and affordability for Uganda.
