Uganda imports 2.5 billion litres of fuel annually, valued at Kes302 billion, but President says sizeable portion comprises inflated fees for middlemen
Uganda’s President Yoweri Museveni has addressed the decision to halt the purchase of petroleum products from Kenya, asserting that Kenyan middlemen have driven up prices, causing an unwarranted financial burden on consumers in Uganda.
President Museveni openly criticized the undisclosed purchases of substantial quantities of petroleum products by his country from Kenyan middlemen. He questioned why Uganda wasn’t directly importing from international refineries, thereby bypassing the extra expenses associated with intermediaries.
A recent investigation exposed considerable disparities in fuel prices, revealing a 42.1% premium for diesel, a staggering 58.53% markup for petrol, and a 44.3% increase in kerosene costs when procured through middlemen, as opposed to direct acquisition from bulk suppliers and refineries.
“We have now entered into agreements with bulk and refinery suppliers who are capable of providing us with more cost-effective pricing,” President Museveni confirmed. I have held discussions on this matter with President Ruto of Kenya, and our delegation is currently in talks with President Samia Suluhu in Dar-es-Salaam,” Museveni says.
The Ugandan government has inked a five-year contract with Vitol Bahrain E.C to ensure a steady supply of fuel. Uganda’s National Oil Company (UNOC) will purchase the entire inventory of fuel from Vitol Bahrain E.C, subsequently distributing it to local oil marketing companies (OMCs).
The collaborative venture includes financing from Vitol Bahrain E.C in the form of a working capital facility, supported by its substantial global assets. This partnership is expected to enhance the competitive pricing of petroleum products within Uganda.
This strategic shift by Uganda follows Kenya’s decision in March to replace the Open Tender System (OTS) for fuel procurement with a government-to-government arrangement involving Saudi Arabia and the United Arab Emirates. Under this agreement, three state-owned Gulf companies—Saudi Aramco, Abu Dhabi Oil Company (ADNOC), and Emirates National Oil Company (ENOC)—are responsible for selecting local OMCs to handle fuel distribution on their behalf.
Furthermore, President Museveni unveiled plans for a domestic refinery in Uganda, set to come into operation in the near future. This development is poised to be a game-changer in the regional pricing of petroleum products.
“In a few years, our refinery will be fully operational. I can confidently assure residents of inland East African nations that they will have access to competitively priced petroleum products, free from added costs associated with intermediaries,” President Museveni affirmed.
“This will benefit the entire region, spanning Uganda, North-Western Tanzania, Rwanda, Burundi, Western Kenya, South Sudan, and Eastern DRC.”
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