The National Resistance Movement (NRM) vice chairperson for Eastern Region, Mike Mukula, is urging unanimous support for the upcoming arrangement between Uganda National Oil Company (UNOC) and Vitol on oil imports. He believes this partnership will lead to cheaper pump prices for Ugandans.
Mukula explained that currently, certain costs are indirectly paid, contributing to higher prices at petrol stations. When oil arrives at Mombasa port in Kenya, embedded costs include fees from the Kenya Ports Authority (KPA), pipeline fees for oil transportation through Kenya Pipeline Corporation (KPC), and handling fees.
Due to the financial constraints of Ugandan companies, they often fall into a cycle where Kenyan companies speculate, buy fuel, and hoard, raising the cost of oil entering Uganda. Mukula stated that Uganda loses about $96 million annually to Kenyan middlemen in extra charges.
Uganda consumes 6 to 7 million liters of oil daily and 200 to 210 million liters monthly. Last year, the country spent a total of $1.6 billion on oil imports.
Speaking on a local radio station, Mukula emphasized that changing the current situation would also grant Uganda more control over its oil industry, which is currently dominated by foreign companies. Despite having 170 oil marketing companies, Ugandan businesses have minimal influence in the oil supply chain.
Cabinet approval for changes to the petroleum law allows Vitol exclusive rights to supply UNOC, which will then sell products to petrol station operators. To ensure a secure supply for Uganda, Vitol and UNOC will establish “buffer stocks” in Uganda and neighboring Tanzania.
