Uganda Fuel prices rise higher

Petrol stations in Kampala including MoOil hiked their pump prices . PHOTO BY S. OTAGE.

Ugandans should prepare to pay higher prices for goods and services in the country following an increase in the cost of fuel by petroleum companies.
Fuel dealers such as Total, Shell, Kobil and MoOil have increased prices of diesel and petroleum products by between Shs50 and Shs150 a mini-survey by Daily Monitor in Kampala revealed yesterday.

The price of petrol - the most expensive petroleum product, now varies between Shs3,550 and Shs3,700 a litre depending on the dealer and location.

Total and Shell Uganda, the biggest oil marketers in the country, increased the price of petrol to Shs3,650 from Shs3,600 per litre last week, while diesel was raised to Shs3, 350 from Shs3,300.

Mr Gideon Badagawa, the executive director of the Private Sector Foundation Uganda, said the increase in fuel prices will increase the cost of doing business and affect the competitiveness of Uganda’s products.
“Fuel drives everything, from transport to thermal power generation.

Once thermal power is expensive to manufacturers, or transporters, the ultimate loser is the consumer who buys products from manufacturers,” he said.

Mr Ivan Kyayonka, the country manager of Shell Uganda, attributed the surge in fuel prices to the rising cost of the dollar and international oil prices.

Petroleum companies buy their products in dollars from markets in the Middle East. A barrel of crude oil now costs $111 from $70 last year.
“The average rate at which we procure oil has moved up. The exchange rate is changing every minute; it’s not something we can manage. I simply go to the market and buy,” Mr Kyayonka told Daily Monitor in an interview yesterday.

The exchange rate of the shilling against the dollar rose to as high as Shs2,730 last week as commercial banks and companies moved to buy many dollars to meet their demands, amid wild speculation that the rate would rise even higher.

The rate has since dropped to Shs2,550 per dollar following the intervention of Bank of Uganda. However, the private sector remains uncomfortable with the current rate.

Mr Peter Ochieng, the operations and marketing manager at Kobil Uganda, said: “The central bank should do whatever it can to make sure that the exchange rate comes down.”

More expenditure
He added that if the exchange rate remains high, fuel prices will also remain up. “As long as the shilling depreciates, it will affect the price of fuel. If the dollar remains stable, then you will see the same price on the board,” he said.

Mr Badagawa called for the tighter regulation of both the foreign exchange and petroleum markets by the government in order to bring down the cost of doing business. The private sector is also urging the government to remove the tax on diesel.

“The increase in fuel and food prices in Uganda has pushed inflation to as high as 16.1 per cent in May before falling to 15.8 last month.
Mr Richard Byarugaba, the managing director National Social Security Fund, told journalists yesterday that the high inflation was increasing the institution’s cost of doing business.

“Certainly, we are suffering from the exchange rates. Some of our investments are in dollars and we need to buy dollars,” he said.