Do not sell off our Jinja fuel reserves

MPs on the Public Accounts Committee have halted plans by the Energy ministry to hand over control of the national fuel reserves in Jinja to a private firm. Mr Fredrick Kabagambe-Kaliisa, the permanent secretary in the ministry, told MPs that government wants the fuel reserves handed over to Tamoil, the Libyan firm that was contracted to extend the Nairobi – Eldoret Oil Pipeline to Kampala.

There are two arguments in favour of the proposal. First, the reserves are a natural fit to the pipeline which already has provisions for such a facility in roughly the same area.

Secondly, since petroleum products have a limited shelf life, there is need to have the reserves constantly replenished. Handing the reserves over to a private firm, however, has very high risks for Uganda, even with the recent oil discoveries in the western part of the country.

The national fuel reserves were built to assure the country of a supply of petroleum products in the event of external shocks. Ceding control of such a strategic national asset to a private firm whose only motivation is profit is a needless gamble and a risk to national security.

The National Oil Company that is being set up to manage the oil industry should be handed the mandate to run these national reserves. It should then be handed a budget to sell off the product through a public auction whenever it has acquired fresh stocks to replenish the reserves.

Private oil companies have showed willingness to profit from short-term disruptions to petroleum supply to the country. To hand over these reserves to the private sector would be to hand over the last line of defence against hoarding and profiteering.
The firm contracted to build the pipeline should be encouraged to build its own reserves which private companies can use to store their product, leaving the Jinja reserves to serve the country in emergencies.

While it is good to encourage the development of the private sector, some facilities and services in the country are of such strategic national interest that they must remain under government control. Our national fuel reserves in Jinja fall under this category.