The Uganda National Oil Company has been put to task by Oil Marketing Companies (OMCs) in the country to elucidate on the novel oil and Petroleum products supply, following a deal that seeks to have global energy broker Vitol, as the sole supplier in the country.
Leading the protest was Anthony Ogalo, the General Manager of SEPA Oil Marketing Company, who wrote to Proscovia Nabbanja, the CEO of UNOC on November 10, reminding the national operator’s directive that all OMCs get their supplies from UNOC.
According to Ogalo, the country may experience oil shocks including supplies and price hikes in January if the supply chain of the oil products is disrupted, without a fallback position, as envisaged by UNOC.
In his letter titled ‘January 2024 Supply Quantities Nomination’, Ogalo, seemingly writing on behalf of the other OMCs, indicated that in a meeting held with officials from UNOC on November 2, they were informed that the OMCs must ‘nominate’ their January 2024 quantities by November 8, to be supplied by UNOC’ Prior to nomination, you indicated that the industry would have to review master Supply and Purchase Agreement between UNOC and the OMCs by November 8, 2023, to enable the signing of the same by November 15. All the above timelines have passed and therefore the OMCs are left in the dark as to what the next steps shall be to avoid a potential stock out in January, ‘ Ogalo’s letter reads in part.
He adds: “We kindly request your guidance on the nomination of January 2024 supplies that is supposed to be made in time for the delivery of January 2024 stocks. Besides your strong advice for the OMCs to nominate the January 2024 quantities through UNOC, our members have received invitations to nominate January 2024 supplies from the Kenya G2G supply structure and they are confused as to what needs to be done based on your earlier communication…we pray that our concern is urgently addressed to avoid unnecessary disruption to the supplies of petroleum products to the Uganda market”.
It is important to note that following the decision to have oil products supplies from Vitol as the sole supplier, for onward transmission to the OMCs through UNOC, the development has come under criticism by industry players, some of who insist it was carried out without the requisite due diligence.
“The decision by government to engage Vitol was carried out without adequate legal and technical advice and they may find it difficult to successfully execute the deal, that is if it ever materialised,” and industry player privy to the goings on, but who sought anonymity so as to speak freely, said.
Meanwhile, in a related development, four industry players in Kenya have run to court, seeking to have the UNOC- Vitol deal revoked by having their national regulalator deny UNOC an importation licence.
Filed in the Machakos high court, the development is likely to have a negative impact on the supply of oil and fuel products to Uganda, the industry player further noted.
Started in 1966, Vitol is the biggest oil products supplier in the world. But what would have been its plaudits has instead been whitewashed by allegations of impropriety including among others, bribery, wheeler dealing, market manipulations and flouting of the best practices as envisaged in the petroleum and oil products industry.