Lawmakers on Parliament’s Environment and Natural Resources Committee have questioned the capability by Uganda National Oil Company as the sole supplier of fuel and gas products in Uganda, wondering if such a monopoly wouldn’t discriminate against other players in the sector operating in Uganda.
The MPs raised their concern during a meeting held to consider the Petroleum Supply Amendment Bill 2023, with Ruth Nankabirwa, Minister of Energy and Mineral Development informed the Committee that the despite the competitive price nature of the Open Tender System and the relatively normal supplies it provided, the system has exposed Uganda to occasional vulnerability to access the committed demand volumes with Kenyan Government prioritising their local company, this creating scarcity in Uganda.
According to Government, Vitol Bahrain will finance supply of the petroleum products up to the delivery points in Kenya and Tanzania and allow UNOC to pay for the imports after receiving payments from the Oil Marketing Companies.
“Vitol is the number one global trading entity with experience of more than 55years in the oil and gas sector. Vitol will bring along this experience and expertise to enhance UNOC import operations,” said Nankabirwa.
Seth Wambede (Mbale City Northern Division) asked the Attorney General, Kiwanuka Kiryowa to explain if such a move wouldn’t go against an earlier Constitutional Court ruling against monopolies in Uganda, to which Kiryowa said the earlier case was against creating monopoly amongst private companies, saying such a case can’t apply to Government companies.
He said, “The monopoly being created is to UNOC, UNOC is the one that has the monopoly to import into Uganda. So it is entering into an agreement to import from Vitol. It can enter into an agreement to import from any other entity. The Bill doesn’t restrict UNOC from getting products from only Vitol, it can choose from any other entity who provide the necessary business cover that UNOC needs. This law only creates monopoly for only UNOC.”
The Attorney General added, “UNOC is 100% owned by people of Uganda so there is no law that can stop people from Uganda from conducting business in their country even as a monopoly. As you may realize, we have Uganda Airlines, Uganda Railways Corporation, now we have UNOC. By the way UNOC is the only company that can deal with the oil that will be produced in Uganda that is an inherent right of the people of Uganda.”
The MPs also asked the Attorney General to explain why UNOC entered into an agreement with Vitol before the Petroleum Supplies Amendment Bill was enacted, to which Kiryowa said that the agreement would only take effect upon the passing of the law by Parliament.
While defending the enactment of the bill, Nankabirwa warned that the failure by Uganda to end reliance on Kenya by January 2024, would condemn Uganda to another year long contract with Kenya.
“If we miss January, Kenya will tie us in a contract that will atke us like one year. And then we move with that Government to Government agreement like they did without our knowledge, we were tied in and when we were trying to plead, they said we have a contract that runs one month. So I consulted with the President and he said let us not cut away, let us wait when their contract ends in January and ours begins in January 2024,” said nankabirwa.
Eddie Kwizera (Bukimbiri County) wondered if UNOC addressed itself to the relationship between Vevo Energy and Vitol, saying Vevo currently operates 156 petrol stations in Uganda wondering why special treatment is being given to Vevo Energy to be the supplier instead of having similar role as other petroleum marketing companies.
“We have been monitoring the bidding in Kenya and because Vevo has very expensive fuel, for three years, they haven’t won anything in Kenya, they might be escaping to come here,” said Kwizera.
Aisha Kabanda (Butambala DWR) tasked Minister Nankabirwa to explain why the Ministry brought such a crucial bill towards the end of the contract between Uganda and Kenya, saying such a move would condemn Government to processing the legislation in a rush, yet it has a great impact to Uganda’s operations.
She asked, “Why do you choose to bring things late in our Committee? The last time you brought a bill, we handled it in a rush because we were under pressure to meet the deadline, you are now telling us we should pass the bill in a rush because we have to catch up with December, you have been studying it for time, you have made the benchmark. Why are you bringing business in our Committee in a rush?”
Jimmy Akena (Lira East Division) on his part questioned the capacity of UNOC to take charge of all petroleum products’ imports in Uganda if the Company has even failed to manage fuel reserves in Jinja.
“The figures you are giving us of 12million litres is just a drop in the ocean for what you are placing UNOC to carry forward.
What does UNOC bring on board apart from being a government entity but where it doesn’t have the capabilities or the equipment or the resources to deliver, it becomes an agent. Vitol now has an agency in form of UNOC although has its own oil company,” said Akena said.
He added, “Our Jinja storage tanks which were put in the 70s are actually very small in the context in which we are dealing with. If we are talking about 6.5-7million litres per day, that is 4days worth of fuel, I think we should be having in the region of 3months, we don’t have that capacity.”
