As it recovers from the hiccups linked to the route in Kenya – which threatened its fuel supply monopoly – Uganda National Oil Company (Unoc) on Tuesday signed sales and purchase agreements (SPAs) with the market’s biggest fuel dealers, in contracts that will tie over 80 oil marketers in Uganda to the State-owned firm for the long term. 

This development follows the recent signing of the tripartite agreement between the governments of Uganda, Kenya, and Unoc at State House in Nairobi, with the first products expected next month, officials said.

The SPAs establish a formal agreement between Unoc as the supplier and the oil marketing companies (OMCs) as the buyers of bulk petroleum products and clarify the roles and responsibilities of each party in the supply chain.

“The agreements with our clients, the OMCs have been completed and so what remains is delivering the vessel/products and the products hitting the fuel pumps,” said Peter Muliisa, Unoc’s Chief Legal Company Secretary.

“With the signing, everything is now set,” said Mr Muliisa. “What remains now is to bring in the first vessel to start delivering the fuel. We expect the first ship under Unoc will be here in July.”

Five companies, including Vivo Energy, Moil, Rock Global Oils, Petro City and Nile Energy inked deals with Unoc at Kampala Serena Hotel, with more companies expected on Wednesday to sign deals that will see the sole supplier rake in billions in revenue.

Unoc chief executive officer Proscovia Nabbanja and Mr Muliisa signed on behalf of the company, while executives of the OMCs signed for their respective companies.

Besides being the sole supplier, Unoc will also have a strong hand in transporting petroleum products arriving in Uganda, operating vessels and oil barges expected to join the company’s portfolio, a development that will see it dominate the industry.

Mr Muliisa said that based on the growth projections of the downstream segment of the industry, Unoc will require a new vessel every month to deliver volumes of fuel that can meet the market demand, which currently stands at seven million litres of fuel per day.

The market has been growing at seven to nine percent per year but is projected to peak at nine to eleven percent in the next five years. 

Unoc has negotiated deals with at least 83 dealers out of the more than 100 OMCs in Uganda, categorised as large to medium operators, while the smaller and micro dealers will continue to buy products from the market’s giants.