Fuel supply monopoly opposed
By Jackson Onyango
A shipping company with an interest in the oil sector, Maersk Line Limited wants to be included in the deal to supply Uganda National Oil Company with petroleum products.
Agents of Maersk Line Limited trading under the trade name HEK International Limited sold the idea to the Natural Resources Committee of Parliament.
The committee is scrutinising the Petroleum Supply Amendment Bill, 2023 which seeks to make Uganda National Oil Company UNOC the sole supplier of petroleum products to the local retailers.
The committee was told that the decision being towed by Uganda to monopolize supply would have the price of diesel reduced to Shs4000
HEK representatives led by the technical advisor for Maersk Line in Uganda, Dr. Rogers Mugambwa Kananura stated that the responsibility of Maersk Line Limited would be to provide financing and shipping of the Petroleum products.
Mugambwa stated that with the kind of price for the products, UNOC would become a natural monopoly with or without the amendment of the law.
“We don’t find the arrangement to provide for suppliers necessary because if UNOC engaged with multiple suppliers the price of fuel would be cheap,” said Mugambwa.
“We don’t support the decision to create a monopoly …we find that we can compete favourably”.
Members of the committee led by the chairperson, Mr Emmanuel Otaala asked the company what would be the advantage of having them on board.
“Give us a comparison between you and VITOL to show that you would provide a better service,” asked Otaala.
Mugambwa responded that “It would be risky to put your eggs in one basket”.
The committee asked HEK international representatives to provide evidence of the supply of petroleum products to Zimbabwe, affiliation to seven refineries; Lafarn of Qatar, Aramco Saudi Arabia, Adnoc Abudhabi, Enoc Dubai and Atyrau, Shymkent and Paulodar all of Kazakhstan.
They too asked for evidence of the relationship between HEK International Limited as an authorized agent of Maersk Line Limited.
Background
On November 1, the Minister for Energy and Mineral Development, Ms Ruth Nankabirwa tabled the Petroleum Supply Amendment Bill, 2023.
The Bill intends to allow UNOC to become the sole supplier of petroleum products through a monopolised supplier, VITOL, which has a direct link to the refineries.
Nankabirwa states that there are multiple agencies along the supply chain today which is responsible for the soaring fuel prices.
Attorney General Kiryowa Kiwanuka told the committee on Tuesday that the reason the government has partnered with VITOL to solely supply fuel to UNOC is for their ability to provide finances for purchase of the refineries.
MPs had questioned why the government does not deal directly with the refineries in its bid to cut out the middlemen responsible for the high pump prices.
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