May 21, 2024
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Uganda Take Steps to Reduce Dependency on Petroleum Supply from Kenya

Uganda is set to grant exclusive rights for the supply of all petroleum products to a unit of global energy trader Vitol, discontinuing the current system that sources oil products through neighboring Kenya, announced Uganda’s Energy Minister, Ruth Nankabirwa.

Under the existing arrangement, fuel companies in Uganda purchase supplies through affiliated firms in Kenya, exposing the nation to supply disruptions and high pump prices, according to Reuters.

“UNOC and Vitol Bahrain E.C. have negotiated a five-year contract, and the Partner (Vitol) will be financing the business by providing working capital,” stated Minister Nankabirwa, according to Reuters.

According to data from the central bank, Uganda imported petroleum products worth $1.6 billion in 2022. The cabinet has approved changes to the petroleum law, allowing Vitol exclusive supply rights to the state-owned Uganda National Oil Company (UNOC). UNOC will then distribute the products to petrol station operators.

To ensure a secure supply for Uganda, Vitol and UNOC will establish “buffer stocks” within Uganda and neighboring Tanzania, Nankabirwa noted. The legal amendments supporting this deal were presented to parliament, awaiting approval, although no specific date for the parliamentary vote was provided. Vitol and UNOC had already signed the contract, with the first exclusive supplies to the state firm anticipated in January, as confirmed by an energy ministry spokesperson.



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