By Karim Were
Museveni says the facility in Mpigi will strengthen Uganda’s strategic fuel reserves as the country moves to reduce dependence on middlemen in petroleum imports.
MPIGI. Uganda has broken ground for a 320-million-litre Kampala Storage Terminal in Mpigi District as the government moves to strengthen the country’s petroleum reserves and improve fuel security.
President Yoweri Kaguta Museveni, speaking at the groundbreaking ceremony, said Uganda must develop stronger systems for storing petroleum products as the country prepares to expand its own petroleum production and deepen cooperation with regional partners.
The project is expected to provide additional storage capacity for petroleum products and form part of Uganda’s broader strategy to improve the reliability of fuel supplies and reduce vulnerabilities associated with dependence on external supply chains.
Museveni also used the occasion to recount how Uganda’s petroleum importation system had previously relied on middlemen in Kenya, saying he was alerted to the arrangement by a Kenyan senator.
“When we took over Government in 1986, we entrusted administration to technocrats. However, it took a Kenyan Senator to alert me that Uganda was buying petroleum products through middlemen in Kenya. Unbelievable!” Museveni said.
According to the President, government intervention following the revelation contributed to a reduction in the prices Uganda paid for imported petroleum products.
He cited diesel prices falling from **$118 to $83 per metric tonne**, petrol from **$97.5 to $61.5**, and aviation fuel from **$114.25 to $79.25**.
#New focus on strategic reserves
The groundbreaking of the Kampala Storage Terminal comes as Uganda prepares for a new phase in its petroleum industry.
The country is developing oil resources in the Albertine Graben, with production expected to eventually provide crude oil for export while supporting domestic economic activity.
Museveni said the expansion of Uganda’s petroleum infrastructure must go hand in hand with development of adequate strategic reserves.
“As we develop our petroleum resources, we must strengthen our strategic reserves,” he said.
Strategic petroleum reserves are intended to provide countries with a buffer against disruptions in fuel supply. Such reserves can become particularly important for landlocked countries such as Uganda, where imported petroleum products depend on transportation corridors through neighbouring states.
The new storage facility in Mpigi is therefore expected to add resilience to Uganda’s petroleum supply system.
#Tanzania partnership highlighted
The President also welcomed Tanzania’s participation in efforts to strengthen petroleum security in East Africa.
He noted that Tanzanian President Samia Suluhu Hassan had sent a delegation to Uganda as the two countries and other regional partners work together on petroleum security.
Uganda and Tanzania already cooperate closely in the petroleum sector through major infrastructure projects, including the **East African Crude Oil Pipeline (EACOP)**, which is being developed to transport Uganda’s crude oil from Hoima to the Tanzanian port of Tanga.
The cooperation has given the two countries a significant role in the development of East Africa’s petroleum infrastructure.
Museveni said regional cooperation would remain important as Uganda develops its petroleum resources and seeks more secure supply chains for refined products.
#Petroleum imports and Uganda’s supply chain
Uganda remains dependent on imported refined petroleum products to meet domestic demand while its crude oil production infrastructure is being developed.
For many years, much of Uganda’s petroleum supply has entered the country through regional transport corridors, particularly from the Kenyan coast.
The President’s remarks highlight the importance of examining the structure and cost of petroleum imports, particularly because fuel prices affect transportation, agriculture, manufacturing, electricity generation and the prices of other goods and services.
Changes in fuel prices can therefore have effects across the wider economy.
Lower import costs can reduce pressure on businesses and consumers, while disruptions to supply can create shortages and increase transportation and production costs.
The development of additional storage capacity is intended to provide government and petroleum-sector operators with greater flexibility in managing such risks.
#Mpigi facility to expand storage capacity
The 320-million-litre terminal represents a major addition to Uganda’s petroleum storage infrastructure.
Located in Mpigi District, the facility is expected to serve the Kampala metropolitan area and surrounding regions while contributing to the country’s wider petroleum distribution network.
The location is strategically significant because Kampala and its surrounding urban areas account for substantial economic activity and fuel demand.
A large storage facility close to the country’s main commercial centre can help reduce the vulnerability of fuel distribution to short-term supply disruptions.
It can also support more systematic management of petroleum stocks.
However, the long-term effectiveness of the facility will depend not only on its storage capacity but also on how efficiently it is integrated into Uganda’s broader petroleum transportation and distribution network.
#Fuel prices remain an economic concern
The figures cited by Museveni underline the importance of petroleum procurement costs to Uganda’s economy.
Diesel is widely used by commercial vehicles, trucks, agricultural machinery and generators, while petrol is predominantly used by private vehicles and motorcycles.
Aviation fuel is critical to the aviation sector and therefore has implications for air transport, tourism and international business.
When the cost of petroleum products rises, transport operators often face higher operating expenses. These costs can eventually affect passenger fares, freight charges and the prices of goods transported across the country.
For this reason, efforts to improve procurement, storage and distribution can have consequences beyond the petroleum sector.
The government has increasingly linked petroleum-sector reforms to its wider objective of lowering the cost of doing business and improving Uganda’s competitiveness.
#From imports to domestic production
Uganda’s petroleum strategy is also being shaped by preparations for commercial oil production.
The country has discovered significant oil resources in the Albertine Graben, particularly around Lake Albert.
The two major upstream developments are the **Tilenga project**, operated by TotalEnergies, and the **Kingfisher project**, operated by CNOOC Uganda.
The crude oil from these developments is intended primarily for export through the EACOP, while Uganda is also pursuing infrastructure and policies designed to increase the domestic benefits of the petroleum industry.
The government has repeatedly said petroleum revenues and investments should contribute to industrialisation, infrastructure development and broader economic transformation.
The storage terminal is part of the infrastructure required to ensure that Uganda’s petroleum sector develops beyond oil extraction alone.
#Importance of petroleum security
For Uganda, petroleum security is particularly important because the country does not currently have a large domestic refining capacity supplying all of its fuel requirements.
Most refined petroleum products consumed in Uganda are imported.
This exposes the country to international oil-price movements, exchange-rate fluctuations, transportation costs and possible disruptions along regional supply routes.
A strategic storage system can help provide a cushion during temporary disruptions.
It can also give authorities and industry players greater capacity to manage supply during periods of high demand.
For a landlocked economy, the issue is even more significant because fuel must travel considerable distances before reaching consumers.
Uganda’s petroleum supply chain is therefore closely connected to developments in neighbouring countries, ports and regional transport infrastructure.
#Regional cooperation
The presence of a Tanzanian delegation at the event also underscores the growing importance of regional petroleum cooperation.
Uganda’s crude oil export plans depend heavily on infrastructure passing through Tanzania.
The EACOP is designed to transport crude oil from Uganda’s oil-producing areas to Tanga on the Indian Ocean coast.
The project has therefore strengthened economic ties between Uganda and Tanzania and increased the strategic importance of their cooperation in the energy sector.
Beyond crude oil exports, regional cooperation can also involve fuel transportation, storage, infrastructure development and measures aimed at protecting supply chains.
Museveni’s remarks suggest that Uganda intends to approach petroleum security as a regional issue rather than solely a national one.
#Need for efficient petroleum management
The President’s comments about the role of technocrats and the earlier petroleum procurement system also point to the importance of effective public-sector oversight.
Petroleum is a strategic commodity, and decisions involving procurement, transportation, storage and distribution can have significant consequences for the national economy.
Transparent systems, competitive procurement and effective regulation are therefore important to ensuring that savings achieved at one stage of the supply chain are reflected throughout the market.
Uganda has established institutions responsible for managing and regulating different aspects of the petroleum industry, including the Ministry of Energy and Mineral Development and the Petroleum Authority of Uganda.
The government’s challenge will be to ensure that expanded infrastructure is accompanied by strong management and oversight.
#Economic significance
The Kampala Storage Terminal could also have wider economic implications.
Large infrastructure projects create demand for construction services, engineering, transport and other supporting activities during development.
Once operational, storage facilities require technical staff, security personnel, maintenance services and other forms of support.
The facility could therefore contribute to local economic activity around its location.
More broadly, reliable petroleum supplies are essential to Uganda’s economy because fuel supports virtually every major productive sector.
Agriculture depends on fuel-powered machinery and transportation. Manufacturing requires fuel for transportation and, in some cases, backup power. The construction sector relies heavily on diesel-powered equipment, while tourism and trade depend on road and air transport.
Improved petroleum security can consequently support economic continuity.
#Strategic reserves and future demand
As Uganda’s economy expands, petroleum demand is also expected to remain an important consideration.
Population growth, urbanisation, industrialisation and increasing transportation needs all have implications for fuel consumption.
At the same time, Uganda is seeking to expand alternative sources of energy and improve access to electricity.
The development of strategic petroleum reserves should therefore be considered alongside the country’s broader energy transition and long-term energy planning.
The government faces the task of ensuring that petroleum infrastructure meets current economic needs while preparing for changes in energy consumption in the future.
#A new phase for Uganda’s petroleum sector
The groundbreaking ceremony represents another step in Uganda’s effort to build a more comprehensive petroleum industry.
For years, public discussion around the country’s oil sector focused largely on exploration and the discovery of crude oil.
The current phase increasingly involves infrastructure, logistics, storage, transportation, regulation, local participation and regional cooperation.
The Kampala Storage Terminal adds another component to that infrastructure.
Its significance will ultimately depend on timely completion, effective operation and integration with the country’s broader petroleum supply network.
For consumers and businesses, the central expectation will be that improved infrastructure contributes to more reliable supplies and a more efficient petroleum market.
For government, the project forms part of a larger effort to reduce vulnerabilities and ensure that Uganda can manage its petroleum needs more effectively.
#Conclusion
The groundbreaking of the 320-million-litre Kampala Storage Terminal in Mpigi marks a significant development in Uganda’s efforts to strengthen petroleum security.
Museveni’s remarks also placed the project within a broader history of reforms aimed at reducing the cost and vulnerability of Uganda’s fuel supply chain.
With the country moving closer to commercial oil production, the development of storage facilities, transport infrastructure and strategic reserves is becoming increasingly important.
The involvement of Tanzania and the wider East African region further demonstrates that Uganda’s energy security is closely linked to regional infrastructure and cooperation.
The next major test will be turning the planned storage capacity into an efficiently managed strategic asset capable of supporting Uganda’s economy and protecting consumers and businesses against future disruptions in petroleum supply.
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