By Isaac Ochieng
The Government of Uganda has for the first time, started bulk trading of petroleum-related products through Uganda National Oil Company (UNOC) supported by the Ministry of Energy and Mineral Development.
Government, going forward, shall now actively participate in the import and sell of fuel in bulk.
This business will be buttressed by the existence of Jinja Storage Terminal (JST) and the planned development of Kampala Storage Terminal, two key downstream projects.
The development and growth of the bulk trading business will enhance UNOC’s capability to participate in handling products from Uganda’s impending refinery.
Currently, Uganda consumes about six million liters of petroleum products per day and demand grew at an average rate of 9% in the past 6-10 years. Demand is not limited to the local market but is continuously growing in the region.
On February 7th, 2020, the Public Procurement and Disposal of Public Assets Authority (PPDA) agreed, following UNOC’s application to apply procurement procedures laid out in the Bulk Trading Policy particularly where PPDA rules are not applicable.
In addition, UNOC engaged with Uganda Revenue Authority to ensure the bulk trading business is well managed with the highest level of tax compliance.
On March 16th, 2020, Hon. Mary Goretti Kitutu, Minister for Energy and Mineral Development (MEMD) and majority shareholder of UNOC launched the bulk trading business.
UNOC made its first sale dubbed “Molecule 1” on the same day to Stabex International an energy company. Over 400,000 liters of fuel (petrol and diesel) would have been delivered to Stabex headquartered in Nansana, Wakiso District by the close of March, 2020.
With this breakthrough, UNOC joined a business hitherto monopolized by oil marketing companies and a few Ugandan companies.
Whilst launching at Stabex, the Minister, MEMD stated that “this was a move in the right direction especially regarding UNOC’s mandate of ensuring profitability of activities in the oil and gas sector.
In addition, to performing its mandate and making profits from the business, I believe UNOC will enable enhance the country’s security of supply for petroleum products and, subsequently, support the country’s capacity to withstand external shocks,”
Hinting on the potential regional market, the Minister advised UNOC to “strategically position itself to participate in the growing market and ensure consistency, timely delivery of quality petroleum products and excellence” adding, “profits are dependent on happy clients.”
Drawing UNOC’s attention to the need for environmental conservation, the Minister pointed out that UNOC has to quickly explore the use of liquified petroleum gas (LPG).
LPG, she stressed, would be an alternative to charcoal, which has decimated trees countrywide.
The Board Chairman, Emmanuel Katongole, disclosed, that Cabinet had approved the bulk trading activities along with other projects in 2019. Citing licenses, the PPDA accreditation and complying with tax obligations, the business, he added, was designed to be legitimate.
UNOC CEO, Proscovia Nabbanja mentioned that the key objectives of the business were “enhancement of national security of petroleum products supply and generation of revenue for UNOC Shareholders”.
The activities, she pointed out, would make a major contribution towards livelihoods. “We also envisage, making a contribution to the economy through the trickle-down effect, for example, reduction of the unemployment gap both directly and indirectly, which will, in turn, boost the standards of living for Ugandans,” Nabbanja said.
UNOC, she added, was working with its partners at JST to explore the use of lake transport to reduce costs and reduce “pressure on our roads”.
General Manager Stabex International, Daniel Cherutich stated that they anticipate having 50 more fuel stations, which would bring the total number of fuel stations to 100.
He further stated that the Company was happy to partner with UNOC and be the purchaser of “Molecule 1”. Following the launch, several oil marketing companies have since approached UNOC, seeking to be supplied with petroleum products.