Growing demand for oil and petroleum products an opportunity for private sector

Rwanda's increasing demand for oil and petroleum products presents an opportunity for the country to grow and sustain its economic growth. And according to experts, a high population that is economically able to purchase the products is an incentive to develop the petroleum resources for local use and economic sustainability.
Moto-taxi operators wait to refill at a city fuel station. There is increasing demand for oil and petroleum products. (File)
Moto-taxi operators wait to refill at a city fuel station. There is increasing demand for oil and petroleum products. (File)

Rwanda's increasing demand for oil and petroleum products presents an opportunity for the country to grow and sustain its economic growth.

And according to experts, a high population that is economically able to purchase the products is an incentive to develop the petroleum resources for local use and economic sustainability.

In fact, rapid growth of the economy means increased demand for oil lubricants and other petroleum products for both industrial purposes but also the automobile industry.

On average, Rwanda consumes 205 million litres of fuel annually with an average consumption of 17-20 million litres per month, according to statistics from the trade ministry.

And according to Rwanda Utilities Regulatory Agency (Rura), the use of petroleum products, including oil lubricants, is expected to grow at an annual average rate of 10.1 per cent, an opportunity the private sector should exploit.

Currently, Rwanda spends about $1.5 million (about Rwf990 million) on diesel imports per year.

This according to sector experts requires a study on supply of petroleum products to be able to meet the growing demand but also reduce the cost of production.

Sarah Doukoure, the managing director of Engen Rwanda, said the country’s rapid growth in the energy sector requires continuous investment to ensure clients access quality oil and petroleum products.

“At Engen, our values are consciously held and consistently applied. They are the standards of excellence we strive to achieve as a successful business and a responsible corporate citizen,” Doukoure said.

Opportunities

Increasing the supply of these products could also boost the country’s competitiveness and provide a platform to reduce the country’s trade deficient, Fred Kabanda, the principal geologist and head of regulatory unit petroleum exploration and production department in Uganda, said.

In a recent interview with Business Times, Kabanda said that it’s very imperative for the country to re-position its oil and petroleum sector to be able to match the increasing demand of petroleum and its products.

“This will include establishing a strong infrastructure  while supporting  the development of refinery facilities for the crude that  provides ‘by-products’ like bitumen, which can be used in development of region’s road infrastructure,” Kabanda said.

Government has been encouraging private investors to build fuel storage facilities to boost the country’s oil reserves.

This according to experts will help sustain the increasing demand and help boost the country’s re-exports thus narrowing the country’s trade deficit.

According to experts developing these resources must take into consideration local use of both oil and gas resources and avoid wastage by flaring.

Other analysts argue that sharing of infrastructure could be one of the ways such resources could be economically developed.

Oil re-exports

Government  is currently looking forward to oil re-exports to its neighboring countries  as means of strengthening  the country’s foreign exchange reserve  position.

And according to Robert Opirah, the Ministry of Trade and Industry director general for trade and investment, construction of more storage facilities with the capacity to hold 42 million litres are underway and is expected to be operational by the end of the year.

“Government wants to boost its current fuel reserve capacity from 30 million litres to over 70 million litres by the end 2015, and more than 200 million litres by 2017,” he said in an earlier interview.

So far, Oilcom, Abbarci Petroleum Marketing Company (ABBARCI), ORYX Petroleum, PROTEK and Mount Meru Petroleum Rwanda have already started building new oil storage facilities in different parts of the country like Kigali and Huye District.

Statistics from central bank indicate that the country’s Imports of energy and lubricants increased by 3.4 per cent in volume while decreasing by 1.4% in value and remained largely dominated by petroleum products (95.8 per cent) during 2014.

This is where government wants to partner with the private sector to further increase revenue from oil and petroleum products.

According to Opirah, the government has already called for contractors to bid for the construction of a 150 million-litre capacity fuel reserve facility as it prepares for the venture.

The plan is to boost the country’s fuel reserves, while strengthening its capacity to engage in the oil and oil products re-export business, serving neighbouring countries, including Burundi and Eastern DR Congo.

“This is enough to supply the local market and export the remaining to the neighbouring markets, like the eastern DRC and Burundi,” Opirah said.

But it is also an assurance of the supply of oil and petroleum products to the already growing demand across the region.

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