Worry as fuel pump prices shoot up twice in four days

Friday April 16 2021
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Pump attendants refuel a car at a petrol station in Kampala. The current high fuel prices are attributed to the dynamics on the international market. PHOTO / ALEX ESAGALA

By Ismail Musa Ladu

Local fuel pump prices have gone up twice in four days, with the trend expected to continue due to the continued increase of crude oil prices on the international market.
Since December 2020, global crude oil prices have risen from $49.99 (about Shs181,000) to $65.41 (Shs236,000) per barrel as of last month, according to Statista, a German company specialising in market and consumer data.
Locally, a litre of petrol is currently trading at Shs4,150, up from Shs4,050, while that of diesel costs  Shs3,710, up from Shs3,630.

At the moment, the government says they have no control over the prices since they are dictated by the international market.  The commissioner for Petroleum Supply and Distribution,  the Rev Frank Tukwasibwe, noted that the increase of fuel prices has nothing to do with the government policy in terms of taxation.
“The problem is the crude oil has been rising and that is what is affecting prices. And we cannot do anything about that because we do not have local production here,” he said.

Govt speaks out
 The Rev Tukwasibwe added that government can be faulted for price increases if there were supply shortages, which he said is not the case.
Industrial players said such price increases of fuel can have a negative effect on the Ugandan economy by causing inflation.
 “Every time fuel prices goes up, it creates a negative ripple effect on various sectors of the economy, often times to the detriment of the consumer,” Mr Dan Marlone Nabutsabi, the chief executive officer of  Uganda Consumer Action Network (U-CAN) , said in a statement.

“Food prices are not spared either. Even government agencies such as the Electricity Regulatory Authority base on the changes in the prices of fuel, among others, to determine the electricity tariff. All this, if not quickly checked by government, may result into inflation,” he added.
Mr Peter Onasis Ochieng, an industry expert, told Daily Monitor yesterday that as long as Uganda and the regional countries continue to rely on imported refined petroleum products, they will have to contend with such changes in pump prices.

“Until a cheaper means of transport is found, the cost of transporting fuel from the port of Mombasa in Kenya or from port of Tanga in Tanzania will continue to influence the cost of pump prices,” he said.
Mr Ochieng added that the exchange rate factor also plays a big role in determining the pump price changes. He said for Uganda’s case, this is always fuelled by the fluctuation of the Shilling against the US dollar. Mr Ochieng attributed this particular increase to the cost of imported refined products on the international market.

The increase in pump prices, according to the executive director of Uganda Manufacturers Association, Mr Daniel Birungi, only complicates the already dire economic situation.
 “Many of our members transport their raw materials from the port by road. And the increase in fuel prices will definitely increase the cost of doing business at a time that the effect of the pandemic has drained businesses of most of our members,” he said.

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Traders worried
If the trend continues, Mr Birungi said, they expect a buffer from the government in terms of a friendly tax structure, arguing that they cannot pass the cost to the consumers anymore, considering that they have equally been hit by the effects of the Covid-19 pandemic.
The chairperson of United Bus Drivers Association, Mr Yunus Kiggundu, said the last resort will be to park the vehicles because they cannot increase the transport prices anymore.
 

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