Government on the spot over empty oil reserves amid escalating fuel crisis

Written by: 
Kabayo Simon

Members of Parliament have quizzed officials from the Ministry of Finance, Planning and Economic Development over the skyrocketing fuel prices in the country.

The MPs on the Committee of Finance believe that the ongoing fuel crisis would have been averted if the county’s oil reserves were full.

Apparently, the oil and gas sector is among the unfunded priorities in financial year 2022/23 and the Finance Ministry is seeking additional funding of Shs48 billion to capitalize Uganda National Oil Company (UNOC) to execute its mandate as an investment arm of government in the oil and gas industry.

“The economy is partially open but the fuel prices are shooting up. In other places, fuel goes for Shs6000 to Shs7000 and in the oil city [Hoima] things are worse,” said Mbale Industrial Division MP, Karim Masaba.

He added that, “this is so because the Ministry of Finance has not prioritised filling up its oil reserves and we are now feeling the effect of high fuel prices”.

The Chairperson of the Committee on Finance, Keefa Kiwanuka said that one of the officials from UNOC recently told the Committee that Uganda’s oil reserves are empty. He said that refilling the country’s oil reserves could solve the ongoing spike in fuel prices.

Officials from the Finance Ministry led by State Minister for General Duties, Henry Musasizi were on Tuesday, 18 January 2022 presenting their Budget Framework Paper for the financial year 2022/23. The  Ministry is requesting for Shs15.4 trillion for treasury operations.

The Minister of State for Planning, Amos Lugoloobi, assured the Committee that the government is handling the challenge of fuel in the country that arose from a policy to curb the spread of Covid-19.

“This problem is at the heart of the government. Yesterday, it was heavily discussed and today we expect a final position on this matter. It is just a disruption about the entry of trucks from the border but once those trucks are released and the current policy problem is addressed, then fuel will flow,” Lugoloobi said.

Kilak North County MP, Anthony Akol questioned the government’s capacity to handle this fuel crisis if it persisted for long.

“Our concern isn’t just about the disruption. Our concern is the country’s preparedness to handle a crisis for just a few days. What if the crisis went on for months? Why are we failing to handle the oil reserves so that in future we do not have such a crisis?” Akol wondered.

Lugoloobi reassured the Committee of UNOC’s plans to construct more oil tanks to reserve oil, a move that incensed MP Masaba who wondered why the Government wants to build more oil reserves yet the current reserves are empty.

Butambala County MP, Muwanga Kivumbi, criticised the Finance Ministry for failing to align the country’s priorities.

“As a leading ministry, how can you fail to budget for the oil sector which is a key game-changer in the economy?  You are waiting to come to Parliament at any given time with a supplementary to blackmail us. Oil is a priority and you have not funded it. Are we serious about oil?” Kivumbi asked.

The Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi argued that whereas they are committed to fully operationalise the oil and gas sector, they are majorly constrained by the resource envelope.

“As a budgeting Ministry, we want oil out of the ground but we are constrained with time, resources and physical space to do everything. We stated clearly that our intention was to increase allocation remittances and to define priorities,” he said adding that, “our overall priorities are to kickstart the full monetization of the economy by encouraging every Ugandan to be part of the economy,” Ggoobi said.

Ggoobi appealed to Parliament to help the Finance Ministry to re-purpose and realign budgetary priorities to ensure that all votes are budgeted in such a way that their activities are achievable.