Uganda is set to implement a new policy starting January next year, requiring all fuel distributors to blend locally produced ethanol into the petrol sold across the country. This initiative, announced by Energy Minister Ruth Nankabirwa, will be spearheaded by the Uganda National Oil Company (UNOC).
The primary goal of this move is to reduce Uganda’s $2 billion annual petroleum import bill and promote cleaner energy alternatives. Nankabirwa emphasized that this initiative is not just about improving fuel quality but is also a significant step towards environmental protection and reducing the overall cost of fuel for Ugandans.
Under the new policy, fuel dealers will be required to blend 5% ethanol into petrol initially, with plans to gradually increase the proportion to 20% depending on local supply capacity. Fuel blending involves combining conventional fossil fuels like petrol or diesel with renewable additives such as ethanol or biodiesel.
Ethanol, derived primarily from molasses, a byproduct of sugar production, is a commonly used blending agent and is considered a cleaner alternative to traditional fossil fuels. It plays a crucial role in supporting the government’s emissions-reduction goals.
This policy aligns with Uganda’s broader energy strategy, which awarded exclusive petroleum supply rights to a subsidiary of global energy giant Vitol in 2023, centralizing fuel imports. Although Uganda currently relies on imported refined petroleum products, the country is gearing up to commence commercial crude oil production next year, with plans to export via a pipeline to the Indian Ocean port in Tanzania.
In a significant development for its energy sector, a UAE-backed firm secured a contract in March to construct Uganda’s first crude oil refinery, a 60,000-barrel-per-day (BPD) facility. According to a statement from President Yoweri Museveni’s office, UAE-based Alpha MBM Investments will hold a 60% stake in the refinery, while Uganda’s state-owned National Oil Company will retain the remaining 40%.
This move towards blending ethanol into petrol and developing a crude oil refinery signifies Uganda’s commitment to enhancing its energy sector, reducing dependence on imported petroleum products, and promoting cleaner energy alternatives.
