Oil & Gas

Beginning January 2026, Uganda will mandate that all petrol sold in the country be blended with locally produced ethanol, a major policy shift announced by the Ministry of Energy on Tuesday. The government says this move is designed to reduce Uganda’s annual $2 billion petroleum import bill and promote environmentally friendly alternatives to fossil fuels. The new strategy signals a growing commitment to energy sustainability and local resource utilization.

In the initial phase, fuel distributors will be required to blend at least 5% ethanol into their petrol supplies. According to the ministry, this percentage will gradually increase to 20%, depending on how much ethanol becomes available. The ethanol is derived from molasses, a byproduct of sugar production, making it a renewable and locally sourced fuel additive that supports Uganda’s agricultural and industrial sectors.

Uganda had previously granted exclusive rights to import and supply petroleum products to a Vitol subsidiary in 2023. However, with the introduction of ethanol blending, the government is aiming to reduce dependency on imported fuel while creating opportunities for domestic ethanol production and job creation. This shift also represents a more balanced approach between international partnerships and local economic development.

Looking ahead, Uganda is gearing up to start commercial crude oil production next year, with plans to export oil through a pipeline to Tanzania’s Indian Ocean coast. The ethanol blending policy is seen as a complementary step toward transforming Uganda’s energy landscape, aligning with both economic growth and environmental protection goals. By combining local biofuel use with upcoming crude exports, Uganda is positioning itself as a more energy-resilient nation.