Uganda is in an uproar following the Kenyan government’s decision to hike bond fees at the Vitol terminal in Mombasa. This move comes just days after Uganda received its first oil consignment directly from the United Arab Emirates refinery, a significant step aimed at curbing fuel shortages and ensuring stable pump prices.
The Uganda National Oil Company (UNOC), granted exclusive rights to import and supply petroleum products by the Petroleum Supply Amendment Act 2023, sources fuel from Vitol, which imports from refineries. This arrangement was intended to eliminate the overpricing and supply instability caused by Kenyan middlemen.
On Wednesday, Uganda celebrated its first direct oil shipment from Vitol, marking an end to the excessive profits previously made by intermediaries. However, the recent increase in bond fees by the Kenyan government has sparked outrage in Uganda.
Uganda’s Minister of Energy and Mineral Development, Ruth Nankabirwa, has criticized the hike and announced plans to return to Nairobi for further negotiations. “We expect the prices to be manageable and more competitive as long as we are not pushed to incur additional costs at the port. I will be meeting my Kenyan counterpart because the bond fee at the Vitol terminal has been increased to 40 million US dollars,” she said.
Nankabirwa warned that this increase could force UNOC to raise prices, negating the anticipated reduction in pump prices for Ugandans. She stressed that this goes against the spirit of the East African Community.
Uganda’s strategy to reduce pump prices hinges on sourcing petroleum products directly from refineries, but Nankabirwa emphasized that this goal can only be achieved if external factors, such as the bond fees, remain stable.
“Ugandans should wish me success in my negotiations to lower the bond fees. The factors influencing fuel prices are many, including scarcity. By ensuring a steady supply, UNOC aims to prevent hoarding and keep prices competitive,” Nankabirwa added.
