allAfrica.com: Uganda: We Have an Eye On Profiteers

FOR the first time, diesel in Uganda is more expensive than petrol. The supply of diesel has been running low for two weeks, leaving several filling stations dry and motorists queueing at others. Cyprian Musoke asked the energy and mineral development minister, Daudi Migereko, what the problem is.

Q: The last time there was a scarcity of fuel it was because of the chaos after the elections in Kenya. What is the problem this time around?

A: It is true; there was a crisis in Kenya which disrupted the supply of petroleum products to Uganda. We eventually managed to overcome this problem.

However, about three weeks ago, a big ship meant to deliver petroleum products to the East African region developed mechanical problems on the high seas and had to be sent back to the Middle East. It was carrying about 60 million litres. Given that the demand for petroleum in the region is very high, the interventions which had been put in place could not satisfy the demands of our country and the rest of the region.

That explains the shortage of fuel, diesel in particular. The shortage has also affected Kenya, Rwanda, the Congo, Burundi, South Sudan and parts of Tanzania.

Q: Hoarders always take advantage of disruptions in supply to hike pump prices. What has the ministry done to rein them in?

A: We have been working closely with the oil companies which control the distribution channels, to rein in those profiteers. I am aware of some distributors who have been hoarding. These cases have been reported to us and the oil companies that supply them, and I know stern action has been taken against some of them. Others have hiked prices excessively. We also discussed those reports with the oil companies. But supply is picking up. I believe the situation will soon be back to normal.

Q: Can you mention those companies that have tried to exploit the situation?

A: The companies that are responsible for the unscrupulous dealers are in a better position to provide this information, but I know that some have been involved in malpractices, including supplying air instead of fuel to their customers.

Q: What long-term plan does the ministry have to avoid such a crisis recurring?

A: Following the Kenyan crisis, the Government came up with a couple of measures. The first one was to diversify our source of supply. Previously, we were depending solely on the Mombasa route. We decided that at least 30% of our supplies should come through Dar-es-Salaam (Tanzania). We are making progress on that. We have also decided that we must try as much as possible to increase our storage capacity.

The current facilities were constructed in the 1970s. Our economy is growing very fast. As a result, the demand for petroleum has increased, yet we still have the same storage capacity.

There was, for example, no need to procure petroleum products for power generation in the past. Now we need up to half a million litres of diesel for power generation alone. The number of vehicles has also increased, as has the number of activities that require petroleum products. We decided to double the storage capacity in Jinja and also construct storage facilities of about 150 million litres around Kampala. These are part of the pipeline project from Eldoret to Kampala.

We are also looking at how we can renovate additional storage facilities in the country, possibly in partnership with the private sector.

Q: How far has the Eldoret-Kampala pipeline project gone?

A: The design work is virtually complete. What is now happening is land acquisition, both in Kenya and Uganda. The political crisis in Kenya temporarily disrupted the programme. But it will get back on course soon.

Q: What is the latest on oil prospecting in Bunyoro? Are we likely to refine our own oil any time soon?

A: As part of the long-term solution, we must fast-track the production of oil and oil products from our own sources in the Lake Albert region. We are optimistic that before the end of next year we should see products coming from our deposits. More work is being done to ensure that we tap into bigger deposits so that we have appreciable levels of production. The next issue will be the refining of these products, which we want to do in the Lake Albert region.

Tullow Oil and Heritage have been giving us very encouraging reports in regard to exploration and drilling work. They are now moving from the Kaisotonya area to Butyaba. Also, Neptune in Rhino Camp is doing good work, just like Dominion which has started exploration in the Kanungu area.

Q: There have been reports that the fuel reserves in Jinja are empty.

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