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Ugandans likely not to see reduced pump prices - Minister Nankabirwa

Energy and Mineral Development minister, Ruth Nankabirwa has revealed that Ugandans are likely not to see reduced pump prices even when Uganda’s first petroleum consignment arrived last Wednesday.

This shocking revelation comes after Kenya increased bond fees of $40 million (about Shs 148bn) at Vitol terminal in Mombasa where Uganda is offloading and storing its products.

“We expect the prices to be manageable, to be more competitive as long as we are not pushed to incur costs at the port. Because as I speak now, I will be going back to Kenya to meet my colleague Hon. [Davis] Chirchir because of one thing. They have increased the bond fee at Vitol terminal where we are going to offload and store our products. When you increase the bond fee to a tune of 40 million, that means you are pushing UNOC to also increase and, therefore, Ugandans are likely not to see reduced prices,” she said.

‘‘Forty million dollars is a deterrent, and this is not how the East African Community should operate,’’ she added.

“So, Ugandans should wish me success in my negotiations so that the bond fees pull down.” she said.

Last year, Uganda made a policy shift in the manner in which it sources, imports and supplies petroleum products by empowering UNOC, a state corporation, to be the sole importer and supplier of all petroleum products.

The Petroleum Supply (Amendment) Bill was presented to parliament by the minister of Energy and Mineral Development, Ruth Nankabirwa in 2023 who argued that there was need to empower UNOC as the sole importer of petroleum products, diversify supply routes, and shield Ugandans from fuel cartels that have historically influenced pump prices thus causing financial strain to citizens.

Subsequently, parliament approved the bill after the second and third reading and it also received endorsement by President Museveni, transforming it into the Petroleum Supply (Amendment) Act, 2023 and UNOC would, moving forward import directly from an international oil company and supply to Ugandan oil marketing companies, eliminating several intermediaries.

Museveni said middlemen overpriced products, for example, Diesel price from the bulk suppliers or refiners was estimated at $83 and $118 from middlemen, Petrol was estimated at $61.5 from bulk suppliers and $97.5 from middlemen while Kerosene was estimated at $79 from bulk suppliers and $114 from middlemen.

He accused some people of letting down their country.

“Take the issue of importation of petroleum products. Uganda imports petroleum products of the magnitude of 2.5 billion litres per annum valued at about US $2bn. Why not buy from refineries abroad and transport through Kenya and Tanzania, cutting out the cost of middlemen?”, said Museveni in a statement on X on November 5, 2023.

“We have now contracted bulk and refinery suppliers able to give us lower prices. I have discussed this with H.E Ruto, the president of Kenya and our delegation is now in Dar es Salaam, discussing with H.E Samia Suluhu”, he added.

The president assured the inland East Africans of competitive petroleum products, free of distributions caused by middlemen and also assured Ugandans that they will benefit. UNOC, which now holds the exclusive role of importing petroleum products and also distributing to oil marketing companies (OMCS), received its first consignment of petroleum products last Wednesday from Kipevu Oil Terminal 11 comprising of 78 million litres of petrol and 65,000 tonnes of diesel, a development which gave light to reduction of pump prices.
The minister also attributed high pump prices to scarcity.

“You know one of the reasons that make the prices go up is the scarcity of the product. When there is scarcity, people tend to keep the product so that prices can go up and they make super profit,” she said.

However, the minister said fuel prices will not be hiked and will remain between Shs 6000 and Shs 8000. According to Tony Otoa, the chief corporate affairs officer at Uganda National Company (UNOC), Kenya Pipeline Company currently charges a tariff of $35.06/m3 from MSA to Western Kenya plus an additional storage and handling fee of $3.74/m3.

Additionally, he said that transporting the products from western Kenya to Uganda costs approximately an additional $40/m3. He also noted that Kenya’s tariff will affect the logistical costs hence influencing retail prices of fuel in Uganda.

“The Ugandan demand averages 80,000 tonnes of petrol, 80,000 tonnes of diesel and a combination of Jet A-1 and kerosene growing at 7% per annum and UNOC is tasked to make this demand available to the OMCs on a monthly basis on top of the buffer stocks it will be holding in the country.” he added.

Comments

0 #1 Apollo Ekelot 2024-07-10 15:00
There was always a risk of sabotage by Kenya, since they were the net losers in the whole deal.

Methinks rationally Uganda should still have pursued the Tanzania route having already indicated their desire to do so. Returning to the eastern route, increased their vulnerability!
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0 #2 Marc Mae 2024-07-11 04:43
Simply stop talking about the East African Community because each county is fighting for its own survival
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