Competition concerns as the President of Uganda assents to the Petroleum Supply (Amendment) Act 2023

The Petroleum Supply (Amendment) Act, 2023 has received Presidential assent in a record-breaking ten days from the date that it was passed by Parliament. In the meantime, the Competition Bill, 2023 which was passed over two months ago still awaits assent, well beyond the constitutional period of 30 days provided for Presidential assent.

The Act amends the Petroleum Supply Act, 2003 and designates the Uganda National Oil Company Limited (“UNOC”) as the main importer and supplier of petroleum products destined for the Ugandan market. Under the Act, all licensed oil marketing companies will now be required to purchase their petroleum products from UNOC or any other person nominated by the Minister of Energy and Mineral Development to import and supply petroleum products in Uganda. Read our previous update on the Act here.  

The Act creates a monopoly over the importation and supply of petroleum products in Uganda and it contradicts existing provisions of the principal Act which require that:

• The Minister of Energy and Mineral Development initiates legislation to support and promote a continuous secure and adequate supply of petroleum products at a competitive cost for all consumers;
• The Commissioner of Petroleum Supply encourages, monitors and enforces the implementation of the observance of the principles of the free market and fair competition; and
• Except where a petroleum supply emergency has been declared, the prices of petroleum products throughout the supply chain shall be governed solely by the rules of supply and demand in a free and competitive market.
  
  

The Act also contradicts the spirit the Competition Bill which seeks to foster fair competition in Uganda.

During the Parliament’s deliberations over the Act, the Committee on Environment and Natural Resources (“the Committee”) opposed the creation of a monopoly for UNOC. The Committee highlighted the contradictions that it would create with the principal Act and with the policy objectives of the Competition Bill, which are to promote and sustain fair competition in Uganda and prohibit anti-competitive agreements that have an adverse effect on competition in the market. The Committee’s recommendation was ignored by the House.

Legislating a monopoly in such an important commercial area such as oil imports, while the Competition Bill awaits Presidential assent, raises concerns about the promotion of fair competition in the country and also casts doubt on whether Uganda will have an effective competition law regime.

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Read the original publication at ENSafrica.