July 9, 2013

Work yet to start on Fuel Reserves

A government plan to build reserves to ensure sufficient stock of petroleum products on the market has failed to start, five years after it was announced.

In 2008, government announced a 150-million-US Dollar project to build fuel reserves in Gulu, Nakasongola, Mbale and Kasese to reinforce the existing one at Jinja. However, to date no progress has been made.

Rev Frank Justaf Tukwasibwe, the Commissioner of Petroleum tells Redpepper online  that government is still in the process of discussing how to conduct the procurement for refurbishing the Nakasongola fuel reserves.

The Nakasongola facility was built in 1977 with a capacity of 40 million litres but is presently redundant. It’s understood that government is seeking to engage the private sector to refurbish and manage the reserve through a Public-Private Partnership (PPP) arrangement. This would require the private operator to provide capital, complete the remaining work, restock, operate, maintain and manage the facility.

Other areas considered for the fuel reserves are Gulu, Kasese and Mbale. However, Tukwasibwe told our reporter that nothing has yet been done to develop the reserves in the areas besides securing the sites.

Tukwasibwe, however, said that Hared Petroleum, the company that won the bid to manage the Jinja fuel reserve, has completed the refurbishment work and was in the process of restocking the 30 million litre facility. According to the transaction, Hared Petroleum, the private operator is expected to refurbish, stock and operate the depot but the facility would remain the property of the government.

The Commissioner explains that while government is expected to ensure sufficient supply and stock of petroleum products on the market, private oil companies also have a duty to keep stock that can last 10 days.

The Commissioner said that the Petroleum Supply department has so far licensed 137 companies for various operations such as petroleum importation, exportation, storage, wholesale, retail, distribution and construction.

According to information from the Petroleum Exploration and Production Department, the consumption of petroleum products in the country is on a steady rise due to a growing economy and population.

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