Uganda is poised to save more than $2 billion on fuel import when the east African country will mandate all fuel distributors blend locally produced ethanol into petrol sold nationwide.
According to Uganda Energy Minister Ruth Nankabirwa, the deal will begin in January 2026.
The announcement comes four months after the United Arab Emirates’ Alpha MBM investment secured the deal to build Uganda’s first crude oil refinery, a 60,000-barrel-per-day (BPD) facility.
Uganda National Oil Company (UNOC) will lead the blending initiative, as the country aims to cut the country’s $2 billion annual petroleum import bill and promote cleaner energy, according to Reuters.
“This policy enhances fuel quality, supports environmental protection, and aims to lower fuel costs for Ugandans,” said Nankabirwa.
Kampala will hold a 40% stake in the investment while the remaining 60% will be overseen by UAE.
Fuel blending involves combining conventional fossil fuels, such as petrol or diesel, with renewable additives like ethanol or biodiesel.
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Fuel dealers will be required to blend 5% ethanol into petrol, with plans to increase this to 20% based on local supply.
Ethanol, derived mainly from molasses, a sugar production byproduct, is a cleaner biofuel that supports Uganda’s emissions-reduction goals.
The plan comes after a Vitol subsidiary was granted exclusive petroleum supply rights in the year 2023.
While Uganda relies on imported refined petroleum, it plans to start commercial crude oil production in 2026, exporting via a pipeline to Tanzania’s Indian Ocean port.
In March, a UAE-backed firm, Alpha MBM Investments, secured a contract to build Uganda’s first 60,000-barrel-per-day crude oil refinery,
