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Fuel Crisis

Aviation fuel shortage in Uganda now spreads to petrol

Wolfgang H. Thome, eTN  Apr 11, 2010

The shortages experienced with AVGAS in recent weeks in Uganda have now spread to ordinary petrol, diesel, and even kerosene used in many households, all commodities needed to keep the country running. Inquiries about the national fuel reserves in Jinja, or a release of these reserves into the market to cushion off the effects of absent deliveries for the time being, have been met with stony silence by those asked, while one fuel company executive dismissed the question by saying: "Why don’t you go to Jinja and check what government has in stock there?" before hanging up the phone, without answering even the question why his own market leader company once again let the country down by failing to bring in enough supplies. Government has meanwhile also confirmed that the national fuel reserves were dry as the facility "was being refurbished," leaving the entire nation reeling from the fallout of yet another fuel crisis.

The cost of petrol continued to rise, in stations that still had supplies as this report was being filed, and a liter of petrol was then going for an equivalent of US$1.65 per liter, on occasion up to US$2, while upcountry the prices were reported to be rising even higher.

Two of the leading safari companies confirmed to this correspondent that they were keeping enough diesel and petrol in stock to run the generators in their camps and keep the "wheels" of their safari vehicles turning, while others were reportedly frantic to secure fuel supplies, being unprepared, as usual, for such eventualities.

The development is thought to have its root causes in Kenya’s recent decision to outsource the inspection of fuels released from bond into the market or for export, with a private company now in charge and raising the fees by reportedly 28,000 percent (twenty eight thousand), leading to a storm of outrage in Kenya, which has since seen the contract being suspended, while fuels, however, remain slow in coming to the market and in particular reaching the hinterland countries of Uganda, Rwanda, Burundi, Southern Sudan, and Eastern Congo.

The planned pipeline extension between Eldoret in western Kenya and Uganda is also far from ready and presently subject to heated arguments between the Libyan company Tamoil and the Ugandan government, and, therefore, only trucks are presently ferrying the precious liquids into the country, some of which reportedly now fetch the commodity in Mombasa directly due to insufficient supplies at the pipeline head and depot in Eldoret, adding, however, further transportation costs to the already burdened consumers.

This situation is particularly worrying for many Ugandans planning to travel to their rural homes for holidays and the many Kampaleans simply wanting to get out of the city to the national parks or the islands in Lake Victoria, as there is absolutely no indication at all, as is the case with AVGAS for the aviation sector, if and when fuels will become easily available again, at affordable prices.

Meanwhile, strong indications have emerged that target="_blank">Shell may sell many of their African distribution businesses as "going concerns," which would include their East African operations, too. Industry observers are speculating over the reasons but claim that shrinking margins were the major cause for this development, leaving the question open if, after "sucking the pockets of consumers dry" the company is now discarding the "empty fruit." Shell has, in particular in Uganda, been under fire over their handling of the aviation fuel AVGAS crisis, one of many in recent years, from which the company does not seem to have learned to institute lasting logistics to ensure constant supplies for the aviation industry.

Suitors are said to be already lining up, including local bidders, but this will be more than likely a drawn-out process, while Shell will try to make "one last killing" by getting maximum proceeds.

Meanwhile, the Ugandan government has also expressed their concerns over the lack of free flow of fuels from neighboring Kenya and has served notice of kinds that within 5 years, a refinery will be operational in Uganda, processing crude oil pumped in-country from oil wells now being developed, at which stage the importation of fuels, unless specialized "stuff" would be coming to an end. Fuel exports, much of which is rather fuel transit constitutes a major portion of Kenya’s export revenues, and questions now are being asked there already what indeed will happen once Uganda becomes self sufficient through internal production of petrol, diesel, heavy fuel oil, jet fuel, and lubricants.

Aviation fuel shortage in Uganda now spreads to petrol
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