Uganda’s state-owned oil company will now directly import and supply fuel to domestic retailers under a new law approved by the government, officials announced Monday.
The Uganda National Oil Company (UNOC) has been mandated to take over sourcing and supplying petroleum products to licensed local companies as part of amendments to the nation’s Petroleum Supply Act, Energy Minister Ruth Nankabirwa Ssentamu said in a statement.
The amended law aims 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,” according to the release.
Currently, over 90% of Uganda’s fuel is imported through Kenya’s port in Mombasa, with Ugandan companies obtaining allocations through affiliated marketers in Kenya. But recent changes to Kenya’s fuel import system led to uncertainties and higher costs for Uganda, the statement said.
Under the new legislation that still requires parliamentary approval, UNOC will contract directly with global suppliers like Vitol Bahrain E.C., which has agreed to a five-year deal to finance the state company’s operations, ensure competitive pricing, and build additional storage capacity to prevent shortages.
Energy Minister Ssentamu said the shift will boost supply security and provide revenue to finance infrastructure projects in Uganda. She said the government remains in talks with Kenya “for a seamless implementation of the policy change.”
The amendment aims to “contribute to the reduction of the pump prices by eliminating unwarranted transactions in the supply chain,” according to Ssentamu’s statement. Uganda and Kenya both seek greater economic stability for the region.
Vitol, a leading global energy trader, will provide financing and work with UNOC “to ensure competitive pricing of petroleum products,” the release stated. Buffers stocks will also be maintained to prevent supply disruptions.
Ugandan oil marketing companies will continue retail sales under commercial agreements, while UNOC handles importation and supply. Ssentamu said the law change was approved by Uganda’s cabinet last week and will now go before parliament.
