In its first competitive line of doing business in the retail end of the petroleum market, the Uganda National Oil Company (UNOC) recently launched the bulk trading of petroleum products business as it seeks to supply products to a number of companies, writes AARON GAD ORENA.
The company, which manages the financial arm of government in the oil and gas industry, will import and sell petroleum products in bulk to registered local oil marketing companies.
The move, the company said, will enhance the security of petroleum products supplies into Uganda and bring forward a sustainable supply of these products in bulk to oil-marketing companies. Ugandans are to enjoy a more reliable supply of petroleum products, the company announced.
“UNOC bulk trading activities are in response to growth in the demand for refined petroleum products. Uganda currently consumes about six million litres of petroleum products per day. This demand has been growing at an average rate of nine per cent,” Mary Goretti Kitutu, the minister of Energy and Mineral Development, said.
She was speaking during the signing of a Memorandum of Understanding between UNOC and Stabex International Limited, a petroleum retail dealer, in Nansana. Proscovia Nabbanja, the CEO of UNOC, while speaking to the press, emphasised that the move into bulk trade is a key step in UNOC starting to fulfil its mandate to the people of Uganda.
“Part one of our mandates is to secure supply of petroleum products for the country. We believe if we started importing petroleum products into the country and the off-takers are the oil-marketing companies like Stabex, it gives us the footprint in the business and also a look at other markets extending beyond what we have here in Uganda,” she said.
UNOC intends to use the venture to learn about the logistics processes with the intention of becoming a major player in the market of bulk supply of petroleum products in Uganda.
With the initial supply of over 400,000 litres already in place, UNOC plans to scale the supply up in the future since the plan is to enhance the national security of supply for petroleum products.
UNOC will import and sell to Stabex, a fraction of their monthly fuel requirements as per the agreed terms and conditions. The first order will be delivered in March 2020. UNOC expects to invest heavily on infrastructure in order to improve their capacity to meet market demand.
“We are looking at investing to the tune of $71 million for the Kampala storage terminal, a project which is phased off to start with 60 million litres,” Nabbanja said.
“To improve on bulk trading, using our terminal in Jinja, we require an investment of about $12 million to improve on the stocks in the Jinja storage terminal. But if we supplement that by construction of the jetty and the pipeline to Lake Victoria, then we have to add an additional $6 million, which totals to $18 million.”