Fuel prices go up amid limited supply

People queue for fuel at a petrol station in Gulu Town due to shortage in supply last year. FILE PHOTO

What you need to know:

  • Shortage of fuel among major suppliers has forced local pump prices to rise by an average of Shs200.
  • A litre of petrol has been selling at an average of Shs3,600, with experts attributing the increase to a general shortage in the region and the effect of rising international prices.
  • Mr Nyantino blamed the shortage on the truck drivers and border clearing delays.

Shortage of fuel among major suppliers has forced local pump prices to rise by an average of Shs200.
The increase means motorists within Kampala are buying a litre of petrol at a market average of Shs3,750, while those upcountry, especially in western and northern Uganda, are paying up to Shs3,800 for a litre.
A litre of petrol has been selling at an average of Shs3,600, with experts attributing the increase to a general shortage in the region and the effect of rising international prices.
A source, who spoke on condition of anonymity in order to speak freely, said the shortage is a result of delayed decommissioning of the off-loading process at Mombasa port in Kenya.
“We are experiencing shortage [of fuel , especially of petrol] because of ongoing repairs on the Kenya Pipeline Company (KPC) in Mombasa. Because of this, there is slow discharge of products,” the source said.
KPC, which transports petroleum products from Mombasa to the hinterland, is undergoing refurbishment, which has forced the company to store less fuel in the last three months.
The pipeline that is currently under renovation, moves petroleum products to Nairobi from where it is supplied to other parts of the country and the region.

KPC speaks out
But in a telephone interview with Sunday Monitor, Mr Jason Nyantino, the KPC spokesperson in Kenya, refuted the allegations and insisted they have enough stock.
“KPC has enough stock to sustain the region for the next 12-days and we are replenishing it regularly,” Mr Nyantino said.
He said the company has depots in Eldoret, with a capacity of 45 million litres and Kisumu with another 40 million litres; enough to supply Uganda and the rest of western Kenya.
Mr Nyantino blamed the shortage on the truck drivers and border clearing delays.
The low fuel supply has created anxiety as suppliers try to buy among themselves to stave off the looming crisis.
But some experts have also identified the impact of the increase in international prices as another possible cause for the current increase in pump prices.
At the start of this month, oil prices hit the $70 (Shs255,500) per barrel mark up from December’s $64 (Shs233,000).
Mr Peter Ochieng, the Hash Energy regional general manager, told Sunday Monitor that the increase might have been influenced by the volatility in the dollar market.
“All oil transactions are paid in dollars. The stronger the dollar, the higher the pump prices will be for the final consumer,” he said.
At the start of this year, the Shilling weakened against the dollar, depreciating to sell between Shs3,650 and Shs3,660. This was weaker than the Shs3,540 at the start of January.

Impact on economy
Consumption. According to records at the Ministry of Energy, Uganda consumes about 5.4m litres of petroleum products daily.
Inflation. Mr Gideon Badagawa, the Private Sector Foundation Uganda executive director, said the immediate effect will feed into commodity prices, which are likely to drive inflation higher.
“High fuel costs will result in a high cost of doing business,” Mr Badagawa said. He said those exporting and importing products will not be spared either as they will find doing business more costly. “If the fuel prices are high, we are going to see reduced exports and imports,” he added.