Kampala. Fuel pump prices have dropped, bringing a sigh of relief among customers who hope this will eventually bring down the cost of doing business.
Experts have attributed the trend in the falling prices to, largely, the strengthening of the Shilling against the dollar, a stance exhibited in the last one month and the falling global oil prices which have reached $36 (Shs120,000) per barrel.
Fuel stations in and around Kampala, are currently quoting a litre of petrol at Shs3,650 down from Shs3,800, while diesel now costs Shs3,000 down from Shs3,250. Kerosene, whose prices are usually stable, went down to Shs2,500 from Shs2,750.
In an interview with Daily Monitor, Vivo Energy Uganda managing director Hans Paulsen said: “The drop is largely attributed to the strengthening of the Shilling against the dollar, a stance exhibited in the last one month and the falling global oil prices.”
Hashi Energy general manager Peter Ochieng agrees, saying: “Also minor effects of overstocking in anticipation of higher demand that did not materialise, is the other reason for the drop in prices.”
Ochieng predicts that the international oil prices will continue to fall but thinks the Uganda Shilling is likely to weaken in January 2016 when business reopens.
“So we may not see a further drop if the trends continue,” Mr Ochieng added.
A drop in fuel prices is a plus for the private sector since fuel is a complementary commodity. This means consumers will spend less on transport thus reducing the cost of doing business in the long run.
Private Sector Foundation Uganda executive director Gideon Badagawa said: “Fuel prices dropping is one of the costs to manage, among many others, if we are to remain profitable and compete.”
The predicted fall
Global oil prices which hovered near an 11-year low of $35.98 (Shs 118,300) on abundant supply and slow demand, are predicted to reach $29 (Shs98,165) per barrel in 2016 according to reports from Saudi Arabia, one of the leading oil producing countries.