Rédaction Africa Links 24 with The East African
Published on 2024-02-03 13:34:06
Uganda’s President Yoweri Museveni is facing immense challenges in his pursuit of a port of call for the country’s petroleum imports. Political and legal setbacks in Kenya have frustrated Kampala’s efforts to use the port of Mombasa and its oil-related infrastructure, leading to a significant setback in the multimillion-dollar fuel importation deal between state-owned Uganda National Oil Company (Unoc) and Swiss commodity and trading giant Vitol to supply petroleum products to at least 170 oil marketing companies in Uganda.
In light of these setbacks, President Museveni has shifted focus to making the port of Dar es Salaam an alternative route through which to deliver fuel to his landlocked country. However, sources in Nairobi indicate that the talks initiated for this alternative plan have hit a brick wall, leaving Uganda potentially looking at a second month without actualizing its fuel importation deal.
A technical team from Uganda has been dispatched to Tanzania for negotiations with President Samia Suluhu Hassan’s government. Discussions are centered around the finer details of the delicate petroleum importation deal, with particular attention to tax waivers, shipping volumes, and mode of transport. Energy Minister Ruth Nankabirwa expressed frustration about the setbacks in Kenya, emphasizing the urgency of finding alternative routes to ensure a secure supply of fuel.
It is understood that one of the issues on the negotiation table is to import about two billion liters of petroleum products through Tanzania, which is about 80 percent of Uganda’s consumption. This highlights a shift from the initial plan of importing the larger percentage through Mombasa due to infrastructure challenges in Dar es Salaam.
The discussions also focus on the challenges along the Central Corridor and requirements that need to be in place to facilitate smooth delivery of imports to Uganda. Tanzania has been offering incentives and deals to attract Uganda’s business, such as a 30-day free storage for Ugandan shippers for all imports and a dedicated goods shed at the port. These offers, along with the potential for better tax waivers, are making Dar es Salaam a more attractive option compared to Mombasa.
Last year, Uganda’s Cabinet approved a plan that mandated Unoc to directly import fuel into the country, with the aim of reducing inefficiencies and doing away with arrangements in Kenya that were leading to high pump prices in the market. President Museveni has been vocal about the need to import directly from the source to avoid being exploited by middlemen.
The setbacks in Kenya, including a lawsuit challenging Unoc’s application for a license to transport fuel products and a pending court ruling, have further complicated the situation. President Museveni’s efforts to salvage the Unoc-Vitol deal have faced opposition, leading to a breakdown in communication between Kampala and Nairobi.
In the midst of these challenges, President Museveni is working diligently to secure an alternative route for fuel imports into Uganda. With negotiations ongoing with Tanzania, there is hope for a fruitful partnership that could potentially resolve the current impasse. As Uganda prepares to chart a new course for its fuel imports, it faces a pivotal moment in its energy security strategy.
Read the original article on Uganda Monitor
