Op-Ed: Oil carries a national security risk

By Ben Ssebuguzi

The Nationalisation of our Petroleum supply has dominated positive and negative vibes in equal measure for a fortnight, but the fact of the matter is that if prices of fuel keep rising, it can take a bite out on our economic growth, it force low consumption and in some cases trigger Political unrest hence becoming a matter of National security.

National security previously known as protection against military attack also includes non-military dimensions such as security from terrorism, minimisation of crime, economic security, energy security, environmental security, food security, and cyber security. Probably that can inform why our oil wells in Buliisa are protected by the UPDF, and why the army and prisons are already involved in the Production of more maize grain in the country.

Given the fact that some countries did not take fuel supply prices as a matter of National security, they have found themselves infested with instability and unrest. A case in point is Indonesia where more than 600 protests have happened over petrol alone. In Italy, there were over 200 protests in the eight months of 2022, and in Ecuador, over 1000 protests have also taken place over the commodity of fuel.

In light of the above, probably that might have instigated our government to make a shift in our import of fuel as we shall see when we go ahead. What is most important is to note that the shift will help us reduce our vulnerability because traditionally Kenya’s oil marketers would only allocate 35% of their fuel to Uganda and Rwanda as transit fuel while they retain 65% hence limiting our potential for quite a while. I remember one time when the government of Kenya suspended the license of one of the vendors for selling us more fuel!

Under the new amendments to the Petroleum Supply Act, the government will start buying from Gulf oil production countries like the UAE under the government-to-government model, where the government will be represented by Uganda National Oil Company (UNOC) which will be responsible for sourcing and supplying Petroleum to oil marketing companies (OMCs) like Shell, Total among others for commercial and retail purposes. This will guarantee our supply unlike before when our 3 OMCs controlled the supply of 70% of our fuel in case of any mishaps, it can hugely affect the pump prices which comes with public outrage hence a supply security risk.

Worse still, because of the rise in prices of fuel due to escalating conflicts in Eastern Europe, which created sanctions against Russia, the second oil-producing nation in the world, switching of European nations on greener solutions, and compounded by the Asian conflict have all had a toll on the global supply with OECD industry inventories being around four percent below their 5-year average in July 2021 according to World Bank insights.

Being cognisant of the fact that he is determined to help his citizens create more wealth and jobs through profitable business, President Yoweri Museveni was smart enough, he reacted quickly and made decisions of the change in the supply of fuel based on data hence making him be on the top of the game given the fact of the global disruptions. The President and policy planners have built a more viable midterm plan of securing the supply of fuel using the government-to-government model hence needing our moral support.

The President is also aware that with costly fuels, the cost of cargo movement can rise and cause further delays and backlogs for industries, creating long and short-term ripples across the supply chain and affecting business agility in our country which affects the economic progress we have achieved over time. That is why the President had to infuse more flexibility into logistical setups and created an alternative opportunity of importing fuel from the main source.

To confirm his stance and assertiveness, the President posted on his X page formally Twitter, on Nov.5, “A whole country buying from middlemen in Kenya or anywhere else! Amazing but true,” he tweeted. “Why not buy from refineries abroad? He inquired.

Additionally, our President’s new move of removing middlemen will go a long way in helping us pay lower freight premiums in case we negotiate well with our suppliers. For Kenyans new fuel arrangement of government to government, their shipping and related costs dropped to $88 per ton of diesel from the previous $188. This also gives us more impetus that our new direction will make us more competitive and viable.

Furthermore, it is also a fact that we use dollars to buy fuel which eats up our reserves, Kenya’s negotiations with Gulf countries have helped them put some breaks on the demand for dollars which always puts pressure on our Shillings whenever OMCs are going to buy fuel. According to reports we spend $2.5b every year on importing fuel.

In a nutshell shell,I would like to persuade Ugandans to believe and trust our policy planners and leaders in their new direction because what they decide they do it in the interest of Ugandans and improving their welfare.

Long live President Museveni, Long live Hajjat Hadijah Uzeiye Namyalo, SPA/PA and manager of ONC

The writer is the Head of Research Office of the National Chairman of NRM, Kyambogo.