MPIGI— President Yoweri Museveni has broken ground on a large fuel storage terminal near the capital, Kampala, a project the government says will shield the country from supply disruptions.
When complete, the Kampala Storage Terminal in Mpigi District, about 26km west of the city, will hold up to 320 million litres of petroleum products, more than Uganda consumes in a month.
It is being developed by the state-owned Uganda National Oil Company (UNOC) with its supply partner, Vitol Bahrain, and is expected to be completed around September 2028.
UNOC chairman Mathias Katamba said construction would formally begin on Friday, September 18. The terminal will initially hold 225 million litres, rising to 320 million litres in a second phase linked to progress on a planned oil refinery in Hoima, in the west of the country.
He put the cost at $350m, which he said was covered by a financing agreement signed in December 2025, under which Vitol Bahrain committed to fund the development.
Speaking at the ceremony, Mr Museveni criticised former officials for allowing Uganda to buy fuel through middlemen in neighbouring Kenya.
He said a Kenyan senator had first alerted him to the practice, and that he had raised it with Eng Irene Muloni, who was then energy minister.
“I told her, ‘This is a disaster, how can this be?’ But she did nothing,” he said.
The president said the failure could only be explained by “either ignorance or corruption”, and questioned the role played by the ministry’s commissioners at the time.
He said Uganda should buy fuel directly from refiners and bulk suppliers rather than from traders, and invited the energy ministry’s permanent secretary, Eng Irene Batebe, to set out the savings.
Eng Batebe said the previous arrangement had been described as government-to-government but in practice involved middlemen.
Since UNOC began sourcing through Vitol, she said, the supply premium on diesel had fallen from $118 to $83 a tonne, on petrol from $97.50 to $61.50, and on jet fuel from $114.25 to $79.25.
Mr Museveni praised Vitol for supplying fuel on credit, saying the company was repaid once consumers had bought the products rather than waiting for payment from the government.
Energy Minister Dr Monica Musenero used her address to raise concerns about land near the terminal acquired by Kampala Capital City Authority (KCCA) for a dumping site, following the 2024 Kiteezi landfill collapse in which dozens of people were killed.
“This strategic facility does not need to be near to another fire risk,” she said, adding that a 2017 master plan had recommended restricting development within one to two kilometres of the site.
Responding, Mr Museveni said the government would not allow a dumping site near the terminal, describing such a plan as “suicide”.
He said proposals for managing the city’s waste were under consideration, including incineration to generate electricity.
Dr Musenero also said an estimated 450 fuel trucks would use the terminal every day, and that Uganda Railways Corporation was being consulted on a rail link to reduce pressure on the roads.
The president said trucks were damaging the country’s roads and that pipelines and railways offered a safer alternative.
Once the Hoima refinery is operating, he said, fuel would be pumped to Mpigi through the Hoima-Buloba pipeline and collected there for Kampala, north-western Tanzania and eastern Democratic Republic of Congo. Until then, fuel would be delivered to the terminal by road.
The minister also said the government could in future link the terminal to the Mahathi facility in Kawuku, creating a route for fuel to be brought across Lake Victoria.
Mr Museveni, however, said he was opposed to transporting petroleum across the lake because of the risk a spill would pose to the country’s fresh water. He noted that the East African Crude Oil Pipeline had been routed around Lake Victoria for that reason.
Dr Musenero described the terminal as the “spine” of Uganda’s energy security, saying it would help the landlocked country become “land-linked”.
The government acquired the site in 2008. It is designed to receive fuel from an extension of the Eldoret-Kampala pipeline and from the Hoima refinery, and to supply a planned pipeline to the Rwandan capital, Kigali.
Eng Batebe said Uganda could currently store about 159.7 million litres of fuel. This includes 30 million litres at UNOC’s Jinja terminal and 70 million litres at the Mahathi facility. The remaining 60 million litres or so are held by oil marketing companies, which are required to keep 10 days’ stock.
The country uses about 240 million litres of petroleum products a month.
“Limited in-country storage often leaves a nation exposed to external shocks, whether from disruptions along the import corridors, global supply constraints or sudden price spikes, like we’ve experienced in the recent past with the Middle East conflict,” Eng Batebe said.
Mr Museveni said Uganda had begun to “wake up” to the importance of fuel security, but that a reserve of about a month was not enough. He cited China, which he said had drawn on its stockpiles during the recent conflict in the Gulf.
“Me, I see this is not how countries should run,” he said.
UNOC is also expanding its Jinja terminal from 30 million to 40 million litres, which will bring combined capacity at the two sites to 360 million litres. Eng Batebe said planning had begun for regional depots in Hoima, Mbarara, Gulu, Arua, Mbale and Soroti.
UNOC took over the Kampala terminal project in 2018. Two searches for a joint-venture partner did not produce a deal, and the second was halted in 2023 after UNOC signed its supply agreement with Vitol, which included a commitment to build the facility.
Mr Katamba said a law passed that year, making UNOC Uganda’s sole importer of petroleum products, had strengthened the case for the project.
Oilcom TZE Limited is the main contractor, while a joint venture of Dar Al-Handasah and Penspen International is managing the project.
Mr Katamba said about 320 people would be employed during construction and about 50 once the terminal was operating. More than 40% of the work would go to local firms, he said, and UNOC expects to earn about $30m a year in storage and handling fees.
Tanzania’s energy permanent secretary, Dr James Mataragio, attended the ceremony ahead of talks this week on the Tanga Energy Hub, where a refinery and storage terminals are also being developed.
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