Uganda's plans to upgrade its fuel reserves, and thus alleviate some of
the pressure on local prices, have stalled due to the implementation of
international sanctions against Libya, Uganda's minister of information said
Monday.
Rising fuel prices triggered protests in
Kampala
Monday. According to traders, local fuel prices have increased by at least 26%
since January.
Tamoil East Africa Ltd., a unit of Libyan state-owned oil company Tamoil
Holdings in
Uganda
, won
a contract in 2007 to upgrade and double the capacity of
Uganda
's
dilapidated reserve tanks, which currently stands at 33 million liters.
However, Tamoil has been removed from the project in line with United Nations
sanctions on Libyan state-controlled companies. It has also been removed from a
project to build a new pipeline from western
Kenya
to
Kampala
.
Uganda
's
Energy Ministry said last week that government is likely to call for fresh bids
for the pipeline project due to the sanctions. The government is also expected
to issue fresh tenders for the reserves project before the end of year.
In total, Libyan assets worth $375 million have been frozen in
Uganda
.
The lack of adequate reserves and rising oil prices are expected keep pressure
on the country's fuel prices in the coming months, according to Kabakumba
Matsiko.
"Uncertainty still remains and oil prices could increase even further,
which may lead to a further increase in pump prices," Matsiko said. "The
increase in fuel prices is primarily attributed to the ongoing conflicts and
political uncertainty in the
Middle East
."
The pipeline and reserve tank projects were initially slated to get underway in
2008 but they have been held up due to changes in the original design of the
pipeline, following the discovery of commercial oil reserves in
Uganda
.
A Tamoil
spokesman couldn't comment immediately.