A Ugandan partner in fuel and lubricantsMarch 11, 2021
Geoffrey Rugazoora, CEO of MOGAS Group, talks to The Energy Year about why the company is excited for Uganda’s coming upstream and pipeline developments and the latest on its activity in the country. MOGAS is an integrated regional downstream oil marketing company active in international oil trading, marine and inland terminals, retail stations, lubricants and LPG.
How important is the Ugandan market for MOGAS Group’s portfolio?
With over 30 years of operations, MOGAS has grown its footprint across all the East African countries – Uganda, Kenya, Tanzania, Rwanda, Burundi and the eastern DRC.
For MOGAS, as a locally founded regional oil marketing company, Uganda is a very important market.
Today, the MOGAS retail network consists of 85 service stations across the region and 32 of them are in Uganda. Four regional depots with a combined capacity of 52,500 cubic metres –including one of 4,400 cubic metres in Kampala – service the network with import receipt, storage and distribution of refined petroleum products. Our premium-quality MOGAS branded oils and lubricants are popular on the Ugandan market and our MOGAS LPG brand, which was pioneered in Uganda, has grown into a household name.
What developments has MOGAS Group seen in the past year?
2020 was a unique and challenging year, mainly due to the unprecedented impact of Covid-19 coupled with the dip in oil prices in March, which exposed us to price risks. The pandemic containment measures undertaken by the regional governments, while necessary, resulted in reduced business activity.
MOGAS Group is a supplier of choice for some of the sectors of the economy which were worst hit by the pandemic, including the hospitality industry, aviation industry, etc. However, with the progressive easing of the restrictive mobility measures and conclusion of elections in Burundi, Tanzania and Uganda, we are seeing progressive recovery of demand for our products. International oil prices have also been edging up.
MOGAS has adapted to the challenging business environment occasioned by the Covid-19 pandemic by running leaner operations across the group, working remotely, transacting online, doing social media marketing and expanding route-to-market options by increasing the MOGAS brand online presence.
Has the pandemic era stimulated investment in digitalisation?
It has spurred increased investment in digitalisation, especially in payment platforms. We are using some of them, like MTN MOMO Pay, which is popular among motorists for paying for our products and services at points of sale (POS).
At MOGAS, we continue to leverage technology to improve operational efficiency in all our lines of business. We are currently going digital at all our POS and digitising business processes like the sales order processing that is now all online. Digitising some of our operations has enabled staff to work remotely with minimal interruptions while still effectively interacting with and serving our esteemed customers virtually through digital platforms. The era has also hastened the rollout of home deliveries of MOGAS LPG to our customers, which has gained popularity.
What opportunities do you see in the Albertine Graben E&P development and East African Crude Oil Pipeline (EACOP)?
On April 11, 2021, key agreements were signed by Ugandan President Yoweri Kaguta Museveni and his Tanzanian counterpart, President Samia Suluhu Hassan, to launch the project works of the EACOP.
The 1,140-kilometre transnational crude oil pipeline will be constructed from Uganda’s Albertine region to the Tanzanian seaport of Tanga. The EACOP, which will be the longest heated pipeline in the world, is expected to be completed in the next four years. We shall therefore soon begin to see activities on the ground.
We eagerly await the expected announcement of the E&P and EACOP FIDs, whose impact is likely to be felt in 2022 and beyond. My expectation is that 2021 will be a year of project preparation, contracting and mobilisation. We should therefore begin to see activities on the ground in the next year.
The announcement of the E&P FID [the Total-led Albertine Graben development] is certainly imminent now. We are very optimistic about the FID – a process we have been keenly following and to an extent participating in. I would like to commend the government for having heeded the calls of investors in order to allow this process to progress. It is expected that Ugandans will soon start to encash the benefits of this long-awaited decision. The FID announcement will generate a great deal of optimism about the investment climate in Uganda and the East African Community in general. It will be a strong vote of confidence in Uganda as a favourable foreign investment destination.
In terms of opportunities, I think there will be numerous business opportunities, especially for companies fulfilling the national content requirement. The EACOP project will generate significant demand for local goods and services, support local human resource development through training and employment of Ugandan citizens as well as drive capacity building of local companies to meet the demand for various goods and services.
For MOGAS, we believe that there is going to be increased demand for our products. We look forward to partnering with major contractors and subcontractors on the E&P and EACOP projects to meet their fuel and lubrication needs.
Interestingly, where the EACOP will terminate at Tanzania’s port city of Tanga, MOGAS has an ultra-modern 11,000-tonne-per-annum lubricating oils and blending plant (LOBP) that ensures production and supply reliability of MOGAS lubricants in the region. The MOGAS lubricants range includes technology-led automotive, industrial and marine grades that are of premium quality.
What is your message to global investors?
First and foremost, I believe Africa as a whole is open for business now more than ever before, most especially East Africa. The ease of doing business in Uganda offers a compelling appeal to both local and foreign investors.
Uganda’s economy is one of the fastest-growing in the world. The Uganda Investment Authority offers one-stop-shop services around the clock. There is good physical infrastructure, young and skilled human resources, minimal market entry barriers, no foreign exchange controls and no price controls.
The security in the country is good, and macroeconomic conditions are stable and well controlled, which are fundamental business enablers. Also, importantly for the foreign investor, Uganda has double taxation treaties with many countries and you can repatriate your dividends as and when you want; the mechanism for doing so is easy and well established.
In the oil sector, as soon as the refinery is in place it is going to create other opportunities for petrochemical industries. But even prior to that, there will be many services needed – logistical services, financial services, training, quality control and certification, oil and hazardous waste management, among others. Therefore, I encourage investors to come and invest in East Africa, which is poised to become an economic powerhouse of sub-Saharan Africa.