Uganda: Investors Needed to Repair Oil Reserves

On August 31st, 2010, posted in: sep10news by

Kasita Ibrahim

Kampala — Uganda is shopping for investors to repair and restock the dilapidated Jinja oil reserves, an effort that will boost fuel supply security. “The Government intends to engage a private operator for a period of 10 years to refurbish, restock, operate and manage the 30-million fuel plant,” said Fred Kabagambe-Kaliisa, the energy ministry permanent secretary.

He added that the project would be under the department of petroleum supplies. “The concession period excludes the refurbishment period of six months. In this arrangement, the storage tanks will be stocked with 20 million litres of diesel and 10 million litres of petrol,” Kaliisa said.

The facility is used to store strategic oil reserves for the Government and private companies at a fee. According to the energy ministry, the tanks will be operated on a public-private partnership arrangement, with one or more private sector companies. The ministry maintains the strategic reserves, which composes of three tanks each with capacity of 10 million litres. The decision to renovate and restock the tanks will relieve the country of unstable fuel supply whenever there is disruption in the supply line from Kenya.

Insufficient reserves in the country have led to an increase in pump prices and public transport fares. It has also increased food prices, especially in the urban areas, and hampered cross-border trade. The cost of electricity regularly goes up since the country relies on some thermal plants to boost power supply. Over the past 10 years, Uganda has periodically suffered shortages in the months of December, January, March, April and in June.

The country relies on oil companies whose limited facilities can hardly store fuel to last the country 10 days. Uganda consumes 2.2 million litres daily and demand grows by 7% annually. The permanent secretary stated that the storage facilities were commissioned in 1988, and new fire-fighting equipment was installed in 2002.

Source: The New Vision Uganda         Image: autoblog.com

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