31 October 2008
editorial
Kampala — The current fuel shortage has again exposed Uganda's vulnerability in terms of oil supply. For the last two days, vehicles have been lining up for petrol. Some oil companies ran out of fuel altogether! This is not the first time.
When Kenya suffered post-election violence early this year, within two days, Uganda experienced a fuel crisis that pushed up bus fares, food prices and generally raised the cost of living.
The main problem is that we do not have any fuel reserves worth talking about. As a result even a slight hiccup leads to fuel shortage.
Out of four fuel reserves planned in the 1970s, only one was constructed, in Jinja.
The others planned for Nakasongola, Gulu and Kasese were not set up. Even then, the Jinja reserve has been operating below capacity and one time the auditor general raised queries on its management. The solution is to set up a fuel reserve in every region.
Since government is not good at managing business, let the reserves be run by private companies. These companies should be regulated by Government. Investors say they do not want to hold their capital in fuel reserves. This is compounded by the fact that they pay taxes upfront. However, if given incentives such as tax breaks and deferring VAT and import duty, they can be encouraged to invest in fuel reserves.
Government could also form joint ventures with private companies to set up researves. In addition the Uganda and Kenyan transport ministries should develop the rail network to reduce dependence on roads.
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