Uganda’s President, Yoweri Museveni, has leveled strong accusations at his government officials for engaging Kenyan intermediaries in the procurement of fuel, a practice that has significantly inflated the cost of oil within the landlocked nation.
Museveni expressed his astonishment at discovering, a few years ago, that Uganda was sourcing its fuel through middlemen in Kenya rather than through direct channels.
For years, Kampala had been dependent on the services of Kenya’s oil marketing companies (OMC) to meet its monthly fuel requirements.
Uganda, predominantly landlocked and reliant on Mombasa for approximately 90 percent of its fuel imports, has recently disclosed its plans to leverage its national oil entity, the Uganda National Oil Company (UNOC), to handle the procurement and distribution of petroleum products to its OMCs.
“Without my knowledge, our wonderful People were buying this huge quantity of petroleum products from middlemen in Kenya. A whole country buying from middlemen in Kenya or anywhere else!! Amazing but true,” said Mr Museveni on Sunday.
“Why not buy from the Refineries abroad and transport through Kenya and Tanzania, cutting out the cost created by middlemen? Those involved were not bothered by these issues.”
Uganda’s Ministry of Energy had earlier announced the suspension of a deal with Kenya’s OMCs due to Nairobi’s move to establish a government-to-government arrangement with Gulf nations, which had distorted local fuel in Kampala.
Upon becoming aware of how Uganda was procuring its fuel, Mr Museveni directed former Minister for Energy, Mary Kitutu, to revamp the procurement process.
“A few years ago, I was made aware of this information through whistleblowers. I entrusted the matter to Minister Kitutu for resolution. About a year ago, I discovered that the issue had not been addressed. Upon closer examination, I realised the substantial losses we were incurring by using intermediaries.”
The president provided a stark contrast between what Ugandans were paying through intermediaries and the potential savings if the government procured directly.
He pointed out that diesel, procured through OMCs, costs $118 per tonne compared to $83 when sourced directly from bulk suppliers. Similarly, petrol came in at $97.5 through OMCs, in contrast to $61 through direct procurement, while kerosene stood at $114 as opposed to $79 through direct sourcing.
“These are the prices when the products have reached East African ports. The magnitude of the losses that Uganda has been incurring due to this practice is evident,” remarked Mr Museveni.
gandae@businessdayafrica.org