Fuel prices surge ahead of festivities

The movement of fuel prices is likely to feed into other commodities

By close of yesterday, pump prices had shown an upward trend with petrol selling for between Shs3,800 and Shs3,750 while diesel sold for Shs3,550 up from Shs3,400.

An industry official, who preferred anonymity, said: “The main contributing factor is the exchange rate which has seen a volatile stance for local unit for a number of weeks.”

“Looking at the trends this situation is likely to worsen,” the source added.

Shell, the country’s leading player quoted a litre of Petrol at Shs3, 800 up from Shs3,700, while Total and Petro fuel stations quoted Shs3,750 for every litre, whereas Kobil sold every litre at between Shs3, 650 and 3,700.
The Shell Uganda country manager, Mr Ivan Kyayonka told Daily Monitor that fuel prices would continue to move northwards as long as the exchange rate remains volatile.

Experts say with fuel being a complimentary product it might in the short term influence the movement of commodity prices and other services upward.
However, players say the spiral is not a result of shortage but an influence of other macroeconomic factors.

“We are building stocks for the festive season, motorists should not worry,” Mr Kyayonka said.

In Kenya a litre of Petrol costs Ksh113.5 (shs3, 518) while Diesel goes for Ksh105.7 (Shs3, 276). Kenya has a price sealing which is reviewed every 15th day of the month.

“Chances are that the price will go up depending on the amount of product brought into the country,” the source added.

In Rwanda where the prices of fuel are controlled by the government across the board a litre of Petrol costs 1,050 francs (Shs3, 990).

While in Tanzania raised its cap on pump prices of petrol and diesel on Tuesday, citing higher import costs and a weakening local currency in a move likely to put renewed upward pressure on inflation. With immediate effect, petrol prices will rise by 3.4 percent to 2,119 shillings per litre in the commercial capital Dar es Salaam, and diesel by 0.53 percent to 1,999 shillings.

Pipeline
All fuel supplied within the region comes from Mombasa through Eldoret channeled through a pipeline whose capacity is still demanding to effectively serve the region.

“There has been some improvement after another pipeline was established between Nairobi and Eldoret but there is still room for improvement in order to catch up with the speed,” the source said.

dnakaweesi@ug.nationmedia.com