President Museveni said on Sunday that Uganda’s recent move to give Vitol, the Dutch private international oil trader, exclusive rights to supply fuel was aimed at eliminating the high fees charged by Kenyan fuel suppliers.
The president said he was made aware of the exorbitant prices “some few years ago” by whistleblowers and instructed the then energy minister to address the issue. This never happened, he said, and the government’s recent proposal to give the Uganda National Oil Company exclusive rights to import fuel is aimed at addressing the problem.
Mr Museveni said an informal survey conducted a few months ago showed that Ugandan companies were buying a tonne of fuel from Kenyan suppliers at an average price of $35.33 (Shs133,390.4) more than the price charged by foreign refineries and global fuel traders.
“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,” Mr Museveni said on his official account on X, the social media app formerly known as Twitter.
Mr Museveni added that Uganda had “now contracted bulk and refinery suppliers able to give us the lower prices,” in a reference to the Vitol deal. He said the decision had already been discussed with Kenya’s President William Ruto – whose country stands to lose the most from Uganda’s decision – and Tanzania’s Samia Suluhu Hassan. Reports indicate that Uganda will use Tanzania’s Dar-es-Salaam port instead of Mombasa to import fuel under the deal.
The ministry of energy last week tabled a bill to give the Uganda National Oil Company the sole mandate to import and supply petroleum products. Unoc’s sole supplier, should the bill become law, will be Vitol’s Bahraini subsidiary, Vitol Bahrain EC.
Much as Mr Museveni publicly blames the Vitol deal on the cost implications of buying from Kenyan middlemen – an arrangement that has been in place for the 37 years he has been in power – minutes of a recent meeting between the energy ministry and local fuel distributors show that the government was driven by anger at the Kenyan government’s recent decision to sign its own exclusive fuel import deal with the governments of the United Arab Emirates and Saudi Arabia.
Read more: Why Uganda is entering exclusive fuel supply deal with Vitol
In fact, his statement is likely a response to recent reports that the surprise move was a reaction to Kenya’s deal – and an attempt to control the narrative, most likely with an eye towards Kenya which is not a fan of the Vitol deal.
Mr Museveni criticised those he described as “internal parasites” who had launched a “social media and mainstream media campaign” against the Vitol deal. He singled out his old nemesis, the Monitor newspaper, in particular, claiming that it was aiding the ‘parasites’ in their campaign. Kenya’s Business Daily, owned by the Nation Media Group, which also owns the Monitor, was the first to report that Uganda’s decision was motivated by Kenya’s deal with Saudi Arabia and the UAE.
It is hard to believe that Mr Museveni has only recently become aware of the exorbitant prices under the current system, and even harder to believe that it has taken his government years to address what he apparently considers an urgent problem.
In addition, the Vitol deal casts uncertainty over an ongoing project that, once completed, was expected to deliver similar results. The $270mn Lake Victoria Fuel Transportation Project aimed to transport fuel by barge across Lake Victoria from Kisumu to Bugiri-Bukasa, near Entebbe, instead of using trucks as is currently the case. This would reduce transport costs, leading to a reduction in the overall price of petroleum products.
In 2015, the government signed a contract with Mahathi Infra Uganda Ltd, the special purpose vehicle leading the project, giving it exclusive rights to transport fuel across the lake for 10 years after the project’s completion.
Mahathi Infra Uganda’s shareholders include Mahathi Infra Services Pvt Ltd of India, Fortune Energy of Uganda, owned by NRM politician Mike Mukula, and the Siginon Group, a Kenyan logistics company controlled by the family of the late president Arap Moi. The Siginon Group holds a 45 per cent stake in the SPV, which is certainly larger than Fortune Energy’s, giving Kenya a larger stake in the project.
Indeed, the Kenyan part of the project progressed at a more determined pace and was completed by August 2019.
Tanzania visit
A statement issued Monday by the energy ministry said a delegation led by Ruth Nankabirwa, the minister, and including Irene Bateebe, the permanent secretary, briefed Ms Suluhu over the weekend on the proposed import policy.
“The minister outlined the potential benefits of the importation policy, which seeks to establish an efficient framework for procuring fuel from international suppliers at lower costs. Additionally, the team updated president Suluhu on the progress of the East African Crude Oil Pipeline project, which will transport Ugandan crude oil to Tanzania’s Tanga port for export,” the statement said.
Mr Museveni expressed confidence that Uganda’s refinery, once operational, will provide competitively priced petroleum products to the region.
President Museveni’s statement in full
Fellow Ugandans and, especially, the Bazzukulu,
Greetings,
I have a number of issues to share with you. Let me start with the kuseerwa (being over-charged) for the petroleum products from abroad. When we came into government, we assumed that the civil servants would deal with money, administration, procurement, etc., and we would deal with policy, ideology, strategy, security, etc.
However, in a number of cases, these wonderful people, really let down their country. Take the issue of importation of petroleum products. Uganda imports petroleum products of the magnitude of 2.5bn litres per annum, valued at about $2bn.
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.
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.
Some few years ago, I got to know this information from whistle-blowers. I handed the matter to [former energy] minister Kituttu to handle. About a year ago, I got to know that the matter was never handled. When I studied the issue, I discovered that we lose so much by buying through the middlemen.
A check, on one occasion, a few months ago, showed that the middlemen were selling us petroleum products at prices as indicated below per tonne:
- Diesel:
i) Middlemen’s price – $118;
ii) Price from bulk suppliers or refiners -$83; - Petrol:
i) Middlemen’s price -$97.5;
ii) Bulk suppliers or refiners’ price- $61.5; - Kerosene:
i) Middlemen’s price – $114;
ii) Bulk suppliers or refiners’ price – $79
These are prices when the products have arrived at the East African ports. You can see the huge loss Uganda has been incurring on account of our wonderful People.
We have now contracted bulk and refinery suppliers able to give us the lower prices. I have discussed this with H.E Ruto, the president of Kenya and our delegation is now in Dar-es-Salaam, discussing with Her Excellency Samia Suluhu.
However, the internal parasites who have been cheating their country, have launched a social media and mainstream media campaign against our liberation/resistance plan against okuseerwa (being over-charged), assisted by the ever pro-parasite paper known as Monitor. As usual, we are ready to confront the parasites.
H.E Ruto is handling the Kenyan part. I salute his contribution. In a few years’ time, our refinery will be up and running.
I can assure the inland East Africans of competitive petroleum products, free of distributions caused by middlemen. The whole of Uganda, north western Tanzania, Rwanda, Burundi, western Kenya, South Sudan and eastern DR Congo, will benefit.
Down with the social-media and mainstream media misinformers!
Signed
Yoweri K. Museveni
Gen (Rtd)
Ssaabalwanyi
($1 = Shs3,775.56)
