Oil companies owe Uganda billions

Oct 16, 2007 02:00 AM

Nine companies have not accounted for fuel received from the Government totalling to over 3.2 mm litres worth Sh 6.8 bn. The defaulting companies include Shell, Caltex, Gapco, Rio Oil, Hared, Moil, Upet, Germasu and Standard. According to the Auditor General's report for the financial year 2006, the "recoverability was increasingly becoming difficult" since the companies had taken long to settle the bills.
"Oil companies that owe Government stocks had not adhered to the required penalties of 22 % on any outstanding balances after 30 days. Some companies are under arbitration, while others have asked to have their repayments rescheduled," the report stated. About Sh 5.4 bn in penalties was accumulated.

The Government does not trade in petroleum products but it stocks fuel products, which can be used to stabilise the market in case of a disruption in supply. The ministry loans out Government fuel to private oil companies whenever there is a disruption in the supply chain. The companies then pay back the Government in fuel stocks.
The Government has an oil depot in Jinja with a storage capacity of 30 mm litres. There are 10 mm litres each of petrol, diesel and kerosene. Small and new oil companies which do not own depots also keep their fuel at the oil depot. The companies are supposed to pay a storage fee of Sh 8 per litre of each product taken out of the storage tanks.

At the time of audit, the companies owed Government Sh 513.5 mm as hospitability fees and Sh 92.4 mm in penalty fees arising from non-compliance with the clauses of the agreement. The Auditor General was concerned that the equipment used at the Jinja storage tanks had not been replaced since 1978.
"The metres have not been serviced in several years. Faulty metres can give misleading readings which can lead to fraud," the report noted.

Source / New Vision
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