A shipping company with vested interests in Uganda’s oil sector has raised objections to the proposed agreement, which would grant Vitol, a Swiss-based Dutch energy trader, the exclusive rights to supply petroleum products to Uganda. The move by Uganda National Oil Company (UNOC) to source all its petroleum products solely from Vitol has sparked a division among local business owners. The debate unfolded during a session before Parliament’s Environment and Natural Resources Committee.
The team representing Maersk Line Limited, operating under the name HEK International Limited, appeared before the committee to express their concerns about monopolizing the importation of petroleum products through Vitol and UNOC. Dr. Rogers Mugambwa Kananura, the technical advisor for Maersk Line in Uganda, argued that a single supplier arrangement is unnecessary. He emphasized that engaging multiple suppliers would lead to lower fuel prices and enhance competitive market dynamics. Dr. Kananura further outlined that Maersk Line Limited could offer financing and shipping services for petroleum products, contributing to cost-effective fuel prices.
During the committee session, Chairperson Mr. Emmanuel Otaala from West Budama South County questioned the specific value that Maersk Line Limited could bring to UNOC’s operations. He requested a comparison between Maersk Line Limited and Vitol to demonstrate their ability to provide superior services. In response, Dr. Kananura succinctly noted that it would be risky to rely solely on one supplier, suggesting the potential drawbacks of a monopoly.
The debate occurs as the committee reviews the Petroleum Supply (Amendment) Bill, 2023. This bill aims to amend certain provisions of the Petroleum Supply Act, 2003, empowering UNOC to import petroleum products for the Ugandan market. The proposed amendments are intended to reduce pump prices by eliminating unwarranted transactions in the supply chain.
Energy Minister Ruth Nankabirwa, during the bill’s presentation to Parliament last month, assured lawmakers that Vitol would exceed the country’s expectations by signing a five-year supply contract with UNOC. Attorney General Mr. Kiryowa Kiwanuka defended the bill before the committee, explaining that the partnership between Vitol and UNOC is essential to secure financing for refinery purchases.
Members of the committee, however, continue to raise concerns about whether engaging with a single company might discourage healthy competition with other competent suppliers. To address this, the proposed amendments empower the Energy Minister, with the cabinet’s approval, to nominate an alternative supplier in cases where the contracted supplier fails to deliver petroleum products for the Ugandan market.
