How ageing oil pipeline is holding Uganda at ransom

Ugandan President YOWERI MUSEVENI

Ugandan President
YOWERI MUSEVENI

 

 

 

For the last one week, Uganda experienced a biting fuel shortage leading to significant increases in prices of petroleum products and threatened to cripple the economy of the landlocked country.

The shortage has been blamed on supply hiccups on the Kenyan petroleum supply system and a new system of clearing cargo imported into the region.

Some major towns are reported to have been low on fuel supplies, resulting in panic buying among motorists. Prices increased by between KSh6 and KSh10 a litre, to retail at USh3,800 (KSh135), up from from USh3 600 (KSh128).

Retail prices of petroleum products in Uganda are determined by the market, which is unlike the situation in Kenya, where prices are capped.

It is not the first time the country is experiencing fuel supply shocks and as in past cases, Kenya’s petroleum supply system is partly to blame for the shortages experienced in Uganda.

New clearing system

A new system of clearing petroleum products, where marketers importing fuel to Uganda through Mombasa are required to clear the products under the Single Customs Territory, is partly contributed to the shortage.

Oil marketers that have operations in Kenya and Uganda said the shortage was due to supply constraints on the Mombasa-Nairobi-Eldoret pipeline used to move products destined for Uganda. Marketers usually pick up the products at Eldoret and move them by road to Uganda.

The shortage happened at a time when the country was hosting senior government officials from the regions – including heads of state from Rwanda and Kenya.

In the just concluded EAC meet, the Heads of States sanctioned the procurement process for Engineering, Procurement and Construction ( EPC) of the Eldoret-Kampala Pipeline. The pipeline is expected to reach Kigali eventually.

At the same time, Kenya Pipeline Company (KPC) is expected to start construction of a new line running from Mombasa to Nairobi to replace the 40-year-old line.

Known as Line 1, the archaic pipeline has in the past been blamed for supply hiccups both in Kenya and Uganda.

Source: Standard Digital

About the Author
Moses M'Bowe, is the Chief International Correspondent, For New Africa Business News And New Africa Daily News.

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