Rwanda to import 12m litres of reserve oil

Rwanda has resolved to import 12 million litres of fuel for its strategic reserve as a measure of curbing the current fuel crisis that has also affected other parts of the East African region.

Commerce Minister Monique Nsanzabaganwa said last week that Rwanda had ordered for some seven million litres of petrol and five million litres of diesel from various sources to supplement the 1.3 million litres already in stock.

The country, which largely depends on diesel generators to produce about 42 per cent of its electricity, has also been recently hit by fuel shortages with some petrol stations running dry.
The fuel crisis in the region affects Burundi and several parts of eastern Congo.

According to Rwanda’s Minister in charge of East African Community, Monique Mukaruriza, EAC ministers from Uganda, Tanzania and Kenya have agreed to facilitate the quick transportation of the fuel.

Despite the fact that Rwanda is currently regulating low pump prices, transport fares have consistently increased.

The government has introduced fuel rationing with cars being allowed to consume not more than 20 litres per day during the shortage.

Ms Nsanzabaganwa said the government had contracted Hashi Empex — a Nairobi-based exporter of refined petroleum products — to ship in more fuel.

The company, which exports fuel to the East and Central African region, was last year awarded a contract to build a $4 million fuel storage terminal in Kigali with capacity of 5.5 million litres.

The company’s managing director Ahmed Hashi recently said it would supply 3.5 million litres of fuel per month to Electrogaz — Rwanda’s electricity power distribution utility — to power its thermal turbines.

Hashi Empex also operates petroleum depots in Mombasa, Nairobi, Kisumu, Eldoret and Jinja in Uganda. It recently received $14.5 million in financing from the PTA Bank to service the contract with Electrogaz.

Citing frustrations caused by the inconsistencies in the oil pipeline that supplies the eastern part of Kenya, Ms Nsanzabaganwa said since private dealers provide a small amount of fuel, government had to intervene and help the private sector supply strategic stocks.

Uganda’s Minister for Energy Daudi Migereko was quoted last week as saying the main cause of the shortage has been the bad state of the refinery at Mombasa and the pipeline, which delivers products from Mombasa to Eldoret and to Kisumu respectively.

Also, power outages in Kenya have affected pumping of products through the pipeline and the production process at the refinery. This has interrupted supply, said Mr Migereko.

Whenever the region is hit by shortages Kenya first takes care of its demands, before allowing any exports to the neighbouring countries. That is where we have found ourselves now, said the minister.

Oil products for the Rwandan market come almost exclusively via the Northern Corridor, from Mombasa through the pipeline to Eldoret, from they are distributed by tankers to Uganda, Rwanda, Burundi and Congo.

The dependence on Kenya was especially felt in Rwanda during the recent crisis in the month of December when the only alternative route was through Tanzania.

In order to increase supply, reliability and minimise the transport cost of imported oil products, Rwanda has joined Kenya and Uganda in the East African oil pipeline project.

Rwanda is expecting to benefit from a further extension of the pipeline from Kampala to Kigali, a distance of 600 km.

The potential to further extend the pipeline to Bujumbura is under discussion.

A market survey by Science Applications International Co-operation carried out through financial support from the United States Trade Development Agency, confirmed that construction of the pipeline is expected to lower the cost of trucking from $56.89 to about $42.44 per cubic meter, hence easing the oil tariff structure. Officials in Kigali say the construction of the Kampala-Kigali pipeline will create a need for additional investment in storage capacity of the country.

The existing storage in Kigali can accommodate up to 17,500 cubic meters of petroleum products.

Officials from the Ministry of Finance and Economic Planning told a donors’ meeting in Kigali last year that, in order to meet the growing demand of petroleum products, two storage facilities — Bigogwe, with a capacity of 5,000 cubic meters, and Rwabuye, with a capacity of 4,000 cubic meters, are being rehabilitated by the government.

Ms Nsanzabaganwa said last week that Rwanda has plans to build its own pipeline from the Indian Ocean.

“The pipeline that supplies Eldoret is sometimes faulty. So, if we link our pipeline from that point, it means that we may also be affected even if we put everything in place,” she said.