Uganda will from January 2026 begin mandatory blending of petrol with locally produced ethanol, as part of a government plan to cut fuel import costs and encourage the use of cleaner energy.

The new requirement, announced by the Ministry of Energy on Tuesday, will start with a 5 percent ethanol-to-petrol ratio and gradually increase to 20 percent, depending on ethanol availability.

The Ministry said the biofuel will mainly be sourced from molasses, a sugar industry byproduct, making the initiative both renewable and locally viable. The move is expected to help Uganda reduce its current annual petroleum import bill, which stands at about $2 billion.

“Blending ethanol with petrol will reduce our import dependence, support local industries, and contribute to a cleaner environment,” the Ministry stated.

Fuel distributors in the country have been instructed to comply with the initial 5 percent requirement as the programme rolls out. The government believes that, in addition to cost savings, the blending strategy will strengthen domestic energy resilience and stimulate agro-industrial growth.

Uganda’s push for ethanol blending comes as the country prepares to kick off commercial crude oil production next year. The oil, discovered in the Albertine Graben region, will be exported through the East African Crude Oil Pipeline to Tanzania’s Indian Ocean coast.

In 2023, Uganda awarded exclusive rights to import and distribute petroleum products to a subsidiary of the global energy trader Vitol. While that deal remains in place, the government hopes the new ethanol policy will ease the country’s dependency on imported petroleum products by partially substituting them with domestically sourced fuel.

Authorities say the ethanol blending plan will also contribute to environmental sustainability and help align Uganda’s energy policies with global efforts to reduce carbon emissions. The shift is expected to play a critical role in transforming Uganda’s energy framework while opening new opportunities for local industries.