Page 7 - AfrElec Week 13

AfrElec COMMENTARY AfrElec
Pestilence and paper-pushers
The coronavirus outbreak is putting pressure on Uganda’s fuel market, and Kenyan tax claims have the potential to make the situation worse
UGANDA
WHAT:
Closed borders and reductions in deliveries to Mombasa are complicating Ugandan companies’ efforts to take delivery of fuel
WHY:
Uganda is also facing problems in Kenya as a result of demands for back taxes
WHAT NEXT:
Ugandan fuel traders may need to look for other supply routes through Tanzania
ACROSS Africa, petroleum product markets are under pressure.
With country after country closing their borders in the hope of curbing the spread of the coronavirus (COVID-19) pandemic, many trad- ers and distributors are having a difficult time gaining access to refined fuels and delivering them to points of sale. As a result, consumers in some states have begun to worry about the secu- rity of their fuel supplies.
One of those states in this position is Uganda.
Over the last week, the Ugandan press has been reporting that concerns are mounting about consumers’ ability to secure gasoline and diesel for their vehicles, and fuels such as kero- sene for other purposes.
This essay will take a closer look at the situa- tion in the East African country.
Border crossings
The coronavirus outbreak has been a significant factor in the emergence of these less-than-fa- vourable supply conditions. Specifically, it has disrupted travel to Kenya, which is currently controls the main transit route for overland fuel shipments into Uganda.
Typically, Ugandan fuel distributors obtain their supplies by sending tanker trucks across the border to Eldoret, the Kenyan city that hosts one of the terminals of the fuel conduit operated by Kenya Pipeline Co. (KPC).
But as The Monitor reported last week, Ugan- dan truck drivers have begun running into trou- ble at the border crossing at Busia on the way to Eldoret.
As of March 27, they were reportedly being held up, in accordance with the Kenyan govern- ment’s decision to close the country’s borders to rein in the spread of coronavirus.
For the record, Uganda has also closed its bor- ders for the same reason, and it too has held up Kenyan truckers attempting to travel in the other direction. Likewise, both sides have argued over how to process and release the documents that truckers must carry to cross the border in light of new public health policies – and have worked together to hammer out temporary solutions.
But the stakes are not the same for these two parties, at least not with respect to petroleum products. Landlocked Uganda is completely
dependent on refined fuels, as it is still several years away from bringing its own oilfields on stream. Traditionally, it has received these fuels via Kenya – that is, via the KPC’s pipeline from Mombasa to the Eldoret terminal, where tanker trucks load up before starting the journey back to Uganda.
As a result, loss of access to Eldoret represents a threat to Uganda’s fuel supplies, The Monitor noted. Other observers showed less concern, with the East African pointing out that petro- leum product distributors could turn to other delivery routes through Tanzania. Neverthe- less, it is not clear whether Ugandan companies can make new transport arrangements quickly enough to head off shortages if Busia and other border crossings are blocked again.
Lower volumes
But border crossings are not the only obstacle. Ugandan Finance Minister Matia Kasaija said last week that the coronavirus outbreak also appeared to be affecting the amount of fuel shipped from the Middle East to KPC terminals
in Eldoret and Kisumu.
According to the East African, Kasaija said
that the volume of petroleum products deliv- ered to Mombasa and earmarked for shipment to Uganda via the KPC system had dropped in recent weeks. As a result, Ugandan companies have had to withdraw fuel from inventory to cover demand, and the country’s reserves are dwindling, he said.
As noted above, the minister attributed these developments to the pandemic, which has had far-reaching consequences for global supply chains. He also said that Uganda’s government was trying to resolve the matter.
“We have raised the issues with the Kenyan authorities, and we are doing everything possi- ble to ensure the supply of petrol and diesel is sorted,” he said, without elaborating.
Tax claims
Meanwhile, coronavirus-related developments are not the only hazards facing Uganda’s fuel market. Petroleum product shipments from Kenya have also been held up for bureaucratic reasons.
On March 21, the East African reported
Week 13 02•April•2020 w w w . N E W S B A S E . c o m P7