Slight drop in fuel prices attributed to weak dollar
Posted Wednesday, May 1 2013 at 23:00
The resumption of business at Mombasa port a month after the Kenyan elections ended peacefully.
Fuel importers have tagged the slight drop in fuel prices by an average of Shs100 to the weakening dollar.
With the price of petrol going for between Shs3,700-3,750, and diesel at Shs3,300 and 3,350, the importers project that the prices are likely to remain stable even after the dollar gains strength because the Mombasa route is fully operational.
“Prices go up and down but in this regard I think it can be attributed to the softness of the dollar,” said Ivan Kyayonka, country chairman of Vivo energy, formerly Shell-Uganda.
Mr Kyayonka further added that the weakening dollar was concurrent with the sharp decline in fuel prices world over, favouring Ugandan fuel importers.
“But I cannot tell whether they are likely to drop further because there are a number of international forces at play.”
The resumption of normal operations along the Mombasa trade route is also pointed out as another reason for the decline in fuel prices, a month after the Kenyan elections ended peacefully.
The Kenyan elections slowed down movement of fuel consignments for close to a month from Mombasa port into Uganda, forcing some traders to shift to the Dar-es-Salaam route. However, this route was costly even after government pledged a Shs150 tax waiver on every litre of imported petroleum products.
Mr Kyayonka admitted that the Dar-es-Salaam port was too “expensive” and his company had not enjoyed any tax incentive as suggested by government.
In the previous months, the economy has been dogged by fuel price fluctuations, which government has constantly sought to resolve by restocking the Jinja fuel reserves- a plan that is yet to be realised.
Mr Rajni Tailor, the chairperson of the Petroleum Dealers Association told the Daily Monitor that there is a sigh of relief amongst fuel users but this will not be long lasting because prices will inch up again shortly.
“In whichever way government is planning, the only solution to this fuel crisis is the pipeline from Mombasa to Uganda,” Mr Tailor added.