New fuel terminal is big plus for Uganda

Over the years, Uganda, being a landlocked country, has experienced fuel shortages. According to the Parliamentary Sectoral Committee report on Natural Resources on the ministerial policy statements and budget estimates for the FY2019/20, Uganda still relies on fuel stocks from the 30 million-litre Jinja-based storage facility and other privately owned facilities for her fuel requirements.
Uganda needs to increase her petroleum reserve capacity in order to hedge against any disruptions that would create a shortage. Therefore, when the construction of the 70 million-litre fuel storage tanks at Bugiri-Bukasa, in Wakiso District, will be completed by April next year, fuel prices are expected to go down.

Currently, Uganda and Rwanda rely on Kenya as a transit country for fuel supply from Mombasa port yet any supply disruptions in Kenya inevitably get easily transmitted to the economies of the two countries. Some of the factors in Kenya that contribute to fuel shortages in Uganda include politics, which causes disruption of road and railway transit cargo, pipeline leaks, delays in unloading of imported fuels, and slow clearance of cargo at customs.
Fuel shortages eventually push up prices of commodities and this has ripple effects in the economy. After the post-2007 election violence in Kenya, fuel supply to Uganda through Kenya, was disrupted. This resulted in increase of fuel prices from Shs2,000 to Shs10,000. Currently, pump price of petrol stand at between Shs4,100 and Shs4,300 per litre of petrol, while diesel is at between Shs3,800 and Shs4,000 per litre.

All oil companies in Uganda are currently expected to provide an average of a 10-day fuel security. Section 26 (2) of the Petroleum Supply Act, 2003 says: “In order to ensure continuity of petroleum supply in Uganda, every licensee shall maintain stocks of not less than 10 days of the average amount of fuel consumed by the licensee within Uganda during the period of three months preceding the effective date of determination.”
The minimum working stock, according to Section 26(3) shall include all stock held in storage depots in Uganda. It excludes petroleum products in transit within Uganda or from another country, fuel held in retail service or filling stations and held in consumer storage locations.

Section 26(6) says, “Any person who fails, without lawful excuse, to comply with subsection (1), commits an offence and is liable, upon conviction, to a fine not exceeding twenty-four currency points.” But the Auditor General’s report of 2015, noted that the reserves were not serving their purpose as they were often operating below capacity.
Therefore, increasing fuel stockholding and bulk procurement is one of things that will minimise disruptions in fuel supply and reduce fuel prices.