The Ugandan Government has introduced a Bill in Parliament aimed at granting the Uganda National Oil Company Ltd (UNOC) exclusive rights to supply petroleum products to licensed oil marketing companies in the country. Energy and Mineral Development Minister Ruth Nankabirwa presented this proposed legislation titled “The Petroleum Supply (Amendment) Bill 2023” to Parliament.
The primary objectives of this Bill are to bolster the security of petroleum product supply, enhance stock holding levels of these products within the nation, and contribute to the competitiveness of consumer and retail fuel prices.
Minister Nankabirwa emphasized that the existing Petroleum Supply Act of 2003 exhibited shortcomings that necessitated this proposed amendment. Under the current Act, UNOC lacks the authority to serve as the exclusive supplier of petroleum imports to licensed oil marketing companies in Uganda, leaving a critical gap that has threatened the country’s petroleum product supply security.
This vulnerability, stemming from the inadequacy of the existing law, has occasionally led to difficulties in accessing the committed demand volumes of petroleum products. Consequently, Uganda has experienced product shortages and abrupt fluctuations in retail fuel prices.
The Bill underwent its first reading in Parliament and has been subsequently referred to the parliamentary committee responsible for natural resources for further consideration.
If this Bill secures approval, it will mark the end of Uganda’s dependence on Kenya’s open tender system for oil procurement, assigning UNOC the sole responsibility of supplying fuel within Uganda. Minister Nankabirwa noted that this policy change aims to streamline the importation of oil products into Uganda, following a Cabinet resolution instructing the energy ministry to devise measures to ensure stable oil supply and pricing.
Furthermore, the minister announced that UNOC will become the exclusive supplier of fuel to oil marketing companies starting from January 2024. This strategic shift is intended to enhance supply stability and pricing predictability in the country.
UNOC, a limited liability company wholly owned by the Government of Uganda, holds the responsibility of managing the government’s commercial interests within the petroleum sector. Its overarching goal is to ensure the sustainable exploitation of Uganda’s petroleum resources.
Minister Nankabirwa highlighted the inefficiencies of Kenya’s open tender system in the regional oil supply chain, pointing out that Kenya often prioritizes its domestic companies over those in neighboring countries like Uganda. She expressed the need to amend the Petroleum Supply Act of 2003 to support UNOC’s direct importation of oil products and reduce Uganda’s reliance on Kenya’s procurement system.