National Planning Authority (NPA) has recommended that government eliminates middlemen in the wholesale purchase of fuel with the country obtaining supply contracts directly from major oil producing and exporting countries such as Saudi Arabia.
In a keynote address themed: “A responsive economic development agenda” delivered during the 10th Institute of Certified Public Accountants of Uganda Economic Forum in Entebbe, Wakiso District yesterday, Dr Joseph Muvawala, the NPA executive director, said that in the current realities of shocks, risks and changing environment, government should address fuel supply shocks through working towards eliminating middlemen in the wholesale purchase of fuel and obtain supply contracts directly from oil producing and exporting countries to reduce retail pump prices.
This, he said, is likely to reduce pump prices by more than 15 percent as dubious activities such as hoarding, which is suspected to be going on in the domestic oil market, being stamped out.
“Government needs to undertake consumer protection to contain the effects of unregulated fuel margins by fuel traders and create and fill up fuel reserves to cushion the economy against unforeseen regional and global supply shocks,” Dr Muvawala.
Fuel prices have increased by more than 40 percent since the beginning of the year, rising by an average of Shs200 in a span of every two days.
Dealers have blamed the increase on global disruptions. However, early this week, Uganda Revenue Authority said there was suspected hoarding among fuel retailers with the intention of distorting pump prices.
In the medium to long term, Dr Muvawala said, government needs to invest in boosting fuel storage capacity to attain three-month worth of reserves, adding that in the medium to long-term, fast-tracking of investment in the oil refinery and crude pipeline, should remain government’s priority.
Reports have indicated that Uganda’s fuel reserves are currently empty with Uganda National Oil Company yet to receive funds to restock them.
Dr Muvawala said, beyond the runaway fuel prices, Uganda is faced with a serious economic crisis resulting from food insecurity, which threatens a number of livelihoods.
Therefore, he said, government should provide food relief to highly deprived areas such as Karamoja and stock food reserves pointing out that Uganda has 736,650 metric tonnes worth of silos, which are largely private-sector-owned and underutilised.
“Government should buy food and hire silos from the private sector to stock them with food supplies to act as buffers during periods of scarcity,” he said.