Petroleum Supplies Amendment Bill 2023 Passed: How UNOC Will Ensure Steady Fuel Supply and Price Stability

The Petroleum Supplies Amendment Bill 2023, was passed on November 14, 2023 by Parliament, granting the Uganda National Oil Company (UNOC) exclusive powers to import all petroleum products into the country.

The Energy Minister, Ruth Nankabirwa, emphasized that the bill will enable the government to ensure a steady supply of petroleum products and diversify supply routes, reducing vulnerability to disruptions in a single source.

This means that UNOC has entered into an exclusive sourcing agreement with Vitol, a Swiss-based Dutch global energy and commodities giant. The contract involves financing from Vitol to ensure a competitive pricing structure for petroleum products.

The bill aims to empower UNOC as the sole importer and supplier of petroleum products in Uganda to licensed oil marketing companies. This is intended to enhance security of supply and stability in the petroleum product market.

By ending dependence on the Kenyan Government for petroleum product imports, Uganda seeks to achieve greater supply security and reduce the impact of external factors on its fuel market.

The legislation is designed to address the issue of unpredictable pump prices by giving UNOC the authority to directly negotiate with refiners and eliminate multiple layers of middlemen in the petroleum supply chain.

The bill aims to provide UNOC with the necessary authority and financial means to improve its business progress, increase petroleum product stock holding levels, and contribute to the competitiveness of consumer and retail pump prices.

The bill supports infrastructure development in the oil sector, with UNOC and Vitol reportedly planning to construct additional capacity at Namwambula, Mpigi, backed by a working capital facility.

Despite UNOC becoming the exclusive importer, OMCs will continue selling products to consumers through their commercial arrangements and retail fuel pumps.

Members of Parliament, including Alioni Yorke Odria, expressed support for the bill as a means to counter fuel cartels, ensure fair pricing, and alleviate financial burdens on citizens at the pump.