UGX 578Bn Kampala Storage Terminal Structure Hangs In Balance

The Uganda National Oil Company – UNOC has said the search for a venture partner is delaying the development of Kampala Storage Terminal – KST, a reservoir aimed at reducing fuel shortages that usually lead to abnormal increase in petroleum products.

Peter Muliisa, the UNOC’s Chief Legal and Corporate Affairs Officer revealed to Uganda Radio Network - URN that KST is ‘not yet constructed’ and the search for a partner to develop it is still on.

“We are in the process of getting a joint venture partner to develop the 320 million litre capacity storage,” says Muliisa.

His response follows concerns raised by lawmakers on the Committee of Government Assurance and Implementation last week about the status quo of the facility in the wake of ever-increasing fuel prices in the country since January 2022.

The terminal estimated to cost Shillings 578.6 billion now hangs in balance as the country continues to witness an increase in fuel prices. Since January 2022, fuel prices have been soaring from Shillings 4,000 a litre to the current prices of between  Shillings 6,000 and Shillings 7,000 - a global crisis being linked to the raging Russia - Ukraine ongoing war.

Last week, Irene Batebe, the Permanent Secretary in the Ministry of Energy and Mineral Development told MPs on the Committee that currently they are more concerned with ‘steady fuel flow to avoid total lack of it than stabilizing the prices. Batebe also disclosed that the Government through UNOC is in negotiation with a South African Company to import fuel in the country, a short-term intervention aimed at ensuring enough fuel stocks ahead of general elections in Kenya slated for August 9th, 2022.

“It is true that UNOC is importing eight million litres and we should have the volumes in-country by 30th of July,” Muliisa confirmed the development. However, he could divulge details of the prices they buy petroleum products saying it would ‘disadvantage’ their business.

During plenary sitting on Tuesday last week, the Deputy Speaker of Parliament Thomas Tayebwa directed the Committee on Environment and Natural Resources to hold meetings with all stakeholders in the petroleum sector in a bid to resolve the current fuel crisis.

Government through the Ministry of Energy and Mineral Development acquired 300 acres of land Namwabula Estate-Nsujjumpolwe village, Kiringete Sub County along Mityana road in Mpigi District, about 26Km from the capital Kampala city for development of the KST.

In April 2022, the State Minister for Industry David Bahati and the State Minister for Minerals, Peter Lokeris presented a statement on the high fuel prices in the country saying the Government would take punitive action including revocation of trade licenses against fuel dealers found hoarding.

Upon completion, the Kampala Storage Terminal facility is expected to be the second largest fuel storage facility in East Africa region, next to Kipevu Storage Terminals in Kenya.

It will keep up to 320 million litres of refined petroleum products to be received as import through Kenya and Tanzania and later from the planned refinery in Hoima. It will also have an extension terminal to serve as a storage facility for Liquefied Petroleum Gas (LPG).