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Oil dealers positive about industry's futurePublish Date: Jan 01, 2014
Oil dealers positive about industry's future
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Hans Paulsen.

By David Mugabe

PETROLEUM dealers strongly believe that the newly discovered oil in Uganda will offer new growth opportunities for distributors and the economy.

Vivo Energy, the company that distributes and markets Shellbranded fuels and lubricants, has described the budding oil industry as a “fantastic opportunity” for the country that should not be wasted.

“It will bring stability of revenue for the country and stable wealth. You will be able to invest in infrastructure and health,” said Christian Chammas, the chief executive of Vivo Energy.

Chammas said he believes Uganda’s prospects are strengthened by a growing middle-class, urbanisation and rising population demographics that all boost consumption.

“This is what drives the petroleum market. We want to seize the opportunity,” he said. Chammas was in the country recently to oversee the change of leadership from Shell’s long serving head Ivan Kyayonka to Hans Paulsen, who has largely served in the telecom industry.

Uganda has discovered about 3.5 billion barrels of commercially viable oil. More than one billion is recoverable in the already explored fields. 

With new areas yet to be explored, commercially viable oil quantities could rise, and with some of it being locally refined, this could boost earnings. 

Uganda consumes about 5% of Shell’s total product volumes among the 16 countries that the company operates in. 

About 30 trucks of fuel enter the country daily, bringing in about one million litres of fuel. With the rising demographics and consumption, this is set to grow.

“Uganda has the potential to grow faster than average, the GDP growth is higher. That is why we are putting more money here. We will be doubling sales, our market share is about 30%,” said Chammas.

The fuel distributor also mentioned the efforts towards fighting fuel adulteration, which is not only hurting businesses, but also consumers.

“The regulation has not been very effective, the standards are not enforced,” said Kyayonka, who welcomed competition because he says it allows the company to differentiate itself. But he said it needs to be regulated.

“The regulative framework has to be enforced, we go through a lot of effort to abide by what we say,” said Kyayonka, who will remain a director in the company. 

Kyayonka has for the last 10 years been the country chairman of Shell Uganda and Shell Tanzania, whilst doubling as East Cluster supply and distribution manager. 

But despite the positive outlook, analysts have called for quicker building of necessary infrastructure, especially the road and rail that connects to the coast.

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