Local and regional petroleum market analysts fear the Government of Uganda could bring on market expensive petroleum products if it sticks with its decision to have Vitol supply Uganda National Oil Company (UNOC), which is to enjoy the monopoly of supplying the petroleum products to oil companies in the country.
This is after parliament passed a bill granting UNOC the monopoly to supply petroleum products, after the MPs were convinced that middlemen in Kenya are responsible for the high prices of petroleum products in Uganda. President Museveni is yet to assent to the bill.
For instance, an analyst who has knowledge about Kenya and Tanzania says imports of fuel products should be very similar, within $10/Mt apart from each other since imports in both are tendered in advance more than 45 days ahead of delivery dates, both allow for LR2 vessel economics and are of similar volumes, both have similar port costs, drafts, and jetty constraints, demurrage is paid separately to the premium, and both countries price off the same Mean of Platts Arab Gulf pricing quote and both price off the same month average systems.
However, it said Vitol’s tender premiums in Tanzania have been expensive than Kenya, for instance, with October 2022 deliveries being $108.86/Mt than the Kenya delivery. ‘This should translate to an equivalent profit per vessel of $7 million for Vitol. On the basis these same assumptions, during these six months, Vitol will have made over $40 million profit from the Tanzania tender. If the monthly volume had been 330kt per month, like Uganda, the participants in Tanzania, will have made $23.1m per month, so per year over $0.25b in profit taken from Ugandan retailers.
Vitol’s costly petroleum deals
In Zambia, diesel they imported recently was off specification on sulfur when trucks were tested. In Bangladesh, during the gas crisis and high gas prices, they flaked on government supply, pocketing over $1 billion.
Bangladesh was forced to find alternative supply to ensure 160 million people had power, but it cost the government billions of dollars.
US Department of Justice fined Vitol $164 million for bribery in Ecuador and Mexico. This was reported by Reuters and Bloomberg.
U.S. fined Vitol for market price manipulation on fuel imports for California (Bloomberg). Vitol exploited UK households of over $500 million on power prices.
