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Fuel prices: “Problem solved at Mombasa“ Minister D`ujanga

By Patrick Kagenda

The independent’s Patrick Kagenda talked to the Minister of State for Energy Simon D`ujanga on how far the work on the oil pipeline construction contracted to Tamoil has gone.

Why is the price of petrol going up?

The prices of the petroleum products on the market are shooting through the roof because the dollar has appreciated against the shilling. Most of the price increases you are seeing are due to the increase in the dollar rate.The dollar has moved from Shs 1,900 to over Shs 2,100. Whenever the dollar appreciates against the shilling, expect to see a price increase. However there was a problem at Mombasa of delivering petroleum but that has improved.

What about the oil terminal?

The oil terminal and the pipeline from Eldoret are one. Progress has been very good except that we had a delay due to way leaves. Most of the districts where the pipeline is supposed to pass have been covered with the exception of the district of Wakiso where there are some land acquisition processes which must still be completed. Tamoil which is the company doing the Eldoret “Kampala pipeline hasnot made a final investment decision because they would like to have thewhole way leaves cleared from Eldoret to west of Kampala at Kyengera before they canmake a final investment decision. That is all we are waiting for.

What is the implication of the Tamoil delay?

It means we shall continue using the road and railway to deliver petroleum products into the country which implies continuing to pay the price of transportation. The idea of the pipeline was to cut out the cost of transport. We are constantly reviewing the progress and we are in constant touch with the Tamoil people.

What if they totally fail on the project?

We have a contract with them and there are terms of conditions in the contract. I do not want to think about them failing but if the worst comes to the worst, the interest of the people of Uganda will come first. If they fail to deliver according to the contract, we will not hesitate to terminate the contract if that is in the best interest of our people.

What is happening to our own oil?

We have a study ongoing which is going to determine the size of our refinery, where it will be placed exactly, and how we shall transport the oil products whether we shall transport only the white products (refined products) or we should also transport crude products. These are studies which are still ongoing. At the moment we cannot say anything until we get the final report of the study which we hope to get in the second quarter of this year. This is by June-July.

Recently Tullow oil contracted Jacobsen Elektro AS (JE) a Norwegian firm to development, construction and operate a thermal plant under a concession agreement. What is the strategy?

A heavy fuel power plant is a product of refinery. When you do a refinery there must be a way of disposing of this residue. The heavy fuel oil is the residue and the way to dispose it off is through a heavy oil thermal plant. Remember we also have got gas as well. And the rule in this country unlike in the other countries is that we are not going to flare the gas. When we start production of oil then somebody must know where to put this gas. And our view is that this gas could be used to generate electricity other than just burning it.All this is part of the ongoing study and in a period of two to three months all this information will be out.

 

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