Consignments of directly imported oil products have reached the Port of Mombasa in Kenya ready for transportation to Uganda. It marks the beginning of the direct importation of petroleum products to Uganda and the end of the monopoly by Kenyan oil Marking companies.
Uganda National Oil Company (UNOC) confirmed that two vessels loaded with petrol and diesel arrived at Mombasa from Kuwait. It said fuel from the two vessels will be discharged into the Kenya pipeline.
Uganda and Kenya entered into a tripartite agreement, whereby Uganda National Oil Company imported fuel will be handled at the Port of Mombasa, then be transported via Kenya Pipeline’s infrastructure to Eldoret and Kisumu depots, and finally delivered to Uganda via road for last-mile delivery storage terminals in Jinja and later Nambwambula in Mpigi.
Uganda opted for the Direct importation of petroleum products following a move by Kenya to switch from the Open Tender System (OTS) to Government-Government (G2G) procurement.
At the time, it was estimated that almost 90% of Uganda’s petroleum imports were traverse Kenya, accounting for approximately 2.5 billion liters valued at about US$2 billion annually.
The Minister of Energy and Mineral Development, Ruth Nankabirwa signed the supply agreements with Kanya witness by Proscovia Nabanja, the CEO of the Uganda National Oil Company (UNOC).
The Minister of Energy and Mineral Development, Ruth Nankabirwa early this year said petroleum bulk in Uganda would ensure that the products reach the market here at a cheaper price. She said logistics costs are expected to come down.
“UNOC will ensure that situations are not used to benefit those who have been in the business to the detriment of the consumers,” Nankbirwa said.
Uganda National Oil Company manages the state interests across the petroleum value chain and ensures sustainable extraction and distribution of the resources.
UNOC’s involvement in the bulk trading business was launched in March 2020 as a strategic revenue stream and a proactive move to capitalize on future opportunities in Uganda’s crude oil refining industry.
UNOC and Vitol Bahrain E.C. last year signed a five-year contract and Vitol agreed to finance the business by providing working capital. The changes followed the assent of the Petroleum Supply (Amendment) Bill, 2023, transforming it into the Petroleum Supply (Amendment) Act, 2023 by President Museveni.
The law granted UNOC an exclusive role in importing petroleum products, which will be distributed to oil marketing companies (OMCs).
The exclusive importation marks an evolution of the bulk trading business, initiated by the company in March 2020 as a revenue source and a strategic move in preparation for future business opportunities arising from the refining of Uganda’s crude oil.
UNOC will import directly from an international oil company and supply to Ugandan OMCs, eliminating several intermediaries.
UNOCC already established a branch in Kenya to facilitate collaboration with stakeholders with the Kenya Pipeline Company (KPC), responsible for transporting petroleum products from Mombasa to in-land towns like Nairobi and Eldoret, where trucks pick up the supplies.
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