A Ugandan company well connected in political circles has beaten out Shell for a deal to supply oil products to the Jinja tank farm. It will probably restore the facility, too.
After a competition lasting several weeks, the Ugandan concern Kenlloyd Logistics Ltd has won the contract to supply the Jinja tank farm (with its capacity of 30 million litres) and it is likely to restore it as well. The contract doesn’t involve privatizing the tank farm, which will remain wholly owned by the government
Kenlloyd is well connected in political circles since it is managed and 65% owned by Albert Muganga, son-in-law of Uganda’s foreign minister, Samuel Kutesa. It won the contract in a fight against Shell Uganda and another Ugandan firm, Hared Petroleum.
Officials at the energy ministry in Kampala told Africa Energy Intelligence Shell came to grief because of legal issues while Hared didn’t get past the technical part of the tender.
When contacted byAEI, Shell Uganda’s boss, Ivan Kyayonka, challenged the decision but said the company wouldn’t go to court over it.
The deal is highly important to Uganda. During the period of political turmoil in Kenya in 2008, Uganda’s economy suffered because of a lack of storage capacity in the country.
But before the tanks are filled with oil products they need to be rehabilitated. That task has fallen to Tamoil, which is due to also build an oil pipeline between Eldoret and Kampala. The energy ministry claims Kenlloyd and Tamoil will work together to restore the tanks, but the investment potential and uncertain situation of Libyan companies like Tamoil (AEI 652) makes it more than likely the firm will be showed aside, to Kenlloyd’s advantage.
Kenlloyd previously won the contract to supply Jinja but Parliament cancelled the deal because it hadn’t been put out to tender by the minister at the time, Daudi Migereko, who is now lands minister.