Even with some reductions, fuel prices have remained unstable, recording occasional increases for over a year. PHOTO / EDGAR R BATTE
In the lead up to the presentation of the Petroleum Supply (Amendment) Bill, 2023, government upped a campaign against oil marketing companies.
Why? They, Ugandans, were told that, were the reason for inflated fuel prices that at some point had peaked at above Shs7,000.
Whereas fuel prices had for long been volatile, the situation had become much chaotic during Covid-19 and at the height of the Russia-Ukraine conflict, which had disrupted supply chains and distribution lines, during which a litre of petrol had risen to above Shs10,000.
Movements remained volatile for almost three years as Ugandans watched in silence, powerless to change what was going on.
Their only hope rested on the unlikely possibility that the markets would sort out an erratic regime that suggested connivance under a cartel-like network.
For long, the prices of fuel have remained a sensitive issue, whose movement government had left to oil marketing companies and market fundamentals.
It has always been a far cry that points to an exploitative system from which government has always been absent.
Unlike Uganda, across East Africa, governments are involved in the operations of the fuel economy, because some experts say it is a very strategic sector that cannot be left to the profit-seeking private sector under the guise of operating a free market.
Some governments in the region, available details indicate, largely control price movements through subsidies, because fuel is a key economic driver that can potentially spike inflationary pressures.
It is, therefore, puzzling that government had for decades left such a strategic sector to be controlled by the markets that have always looked for any available excuse to increase pump prices, irrespective of movements in the international markets.
Ending the exploitation
Thus, when in 2022 government suggested that it was working on measures to end the exploitation, many Ugandans easily bought in, not because they hoped for an overnight solution, but believed that their decades of cries had at last been heard.
At the time, government blamed oil marketing companies for the volatility.
In fact, not once, President Museveni chastised oil marketing companies for being exploitive and opportunistic.
Thus, in 2023, government, through the Ministry of Energy, tabled the Petroleum Supply (Amendment) Bill, 2023, which sought to give Uganda National Oil Company (UNOC) the sole responsibility of importing Uganda's petroleum products.
The promise had been that with the exploitative oil marketing companies weeded out, Uganda would achieve low fuel prices and also ensure that the country had sufficient stocks.
In fact, in several addresses, Energy Minister Ruth Nankabirwa projected that with government taking control, fuel prices, which had hovered at a high of between Shs5,800 and Shs6,000 in much of 2023 and the first half of 2024, would reduce to under Shs5,000 in the first three months.
The Bill was eventually pushed through Parliament and was subsequently assented to by President Museveni, handing UNOC the sole responsibility of importing petroleum products, which it started in April 2024.
The shift seemed to have driven fuel prices across the country to under Shs5,000 for a litre of petrol, but before long, the prices started showing signs of volatility before rising to levels that had not been seen in over six months.
Early this year, in the week ending January 10, petrol prices dramatically rose to above Shs5,000, after a band of reductions in the three months to December 2024, in which prices had dropped to a market average of Shs4,860.
The reasons for the January increase have remained vague to date, with both oil marketing companies, which, unlike before, now source fuel from UNOC, and government blamed each other.
At the time, the UNOC chief corporate affairs officer, Tony Otoa, told Monitor they had not changed their retail pricing structure since taking over the responsibility of importing petroleum products, a claim oil marketing companies dismissed.
“They [UNOC] can’t say that the same price they bought fuel last month [December] is the same they bought it this month. That is the response they normally give. What do they mean? Why would someone just increase the price just like that?” Anthony Ogalo, the general manager of the Sustainable Energy and Petroleum Association of Uganda, an umbrella association of oil marketing companies, wondered in response to Otoa’s claim then.
The price would, however, slightly reduce to settle at about Shs4,999 for about three months, but higher than the December Shs4,860, before increasing again in mid-May due to “logistical challenges in product delivery”.
“In recent days, some areas within the country have experienced a slight increase in retail pump prices, especially that of petrol ... largely ... due to logistical challenges in product delivery through the Kenyan route,” UNOC said in a June 3 statement.
It was not immediately clear how long the delivery challenges had lasted, but one of the assurances government had given Ugandans when it was promoting the petroleum supply amendments was stability and sustainability of the supply of fuel products by ensuring that the country had enough stocks to absorb shocks for at least 30 days.
Most expensive fuel
But even without the delivery challenges, across East Africa, Uganda has the most expensive petrol prices, averaging Shs5,047.3 ($1.388), according to data from GlobalPetrolPrices.com, which tracks prices of fuel in about 150 countries.
Uganda is only rivalled by Burundi and Kenya, whose petrol prices retail for about Shs4,883 ($1.343) and Shs4,876 ($1.341), respectively.
DR Congo and Tanzania, which retail petrol at Shs3,741 ($1.029) and Shs3,985 ($1.096), respectively, have the lowest prices across East Africa, while in Rwanda petrol prices retail at Shs4,196 ($1.154).
However, across East Africa, it is only Uganda that doesn’t subsidise or control fuel prices.
UNOC last week said it expects to “restore supply consistency across the country and stabilise retail pump prices in the coming days, but did not say whether the prices will be lower or within levels of other East African countries.
UNOC has now made more than a year since it took over the importation of petroleum products.
However, throughout that period, Uganda has had one of the most costly fuel pricing regimes.
Average petrol price across East Africa
Country | Petrol |
Uganda | Shs5,047.3 |
Burundi | Shs4,883.7 |
Kenya | Shs4,876.4 |
Rwanda | Shs4,196.4 |
Tanzania | Shs3,985.5 |
DR Congo | Shs3,741.9 |
Ms Nankabirwa has previously indicated that whereas prices had reduced over the one year, she would want to see a further reduction.
Fuel prices are determined by several fundamentals, which include movements in the international market, changes in forex rates and inflation, among others.
However, the above fundamentals have largely been stable over the last year.
Whereas inflation has slightly edged up to 3.8 percent in May from 3.6 percent in April, it is still below Bank of Uganda 5 percent target, while forex rates have remained range-bound (Shs3,636) and a barrel of crude closed Friday at $63.22, a 0.15 percent, a drop from $64.6 early in the week.
Across Africa, Libya and Angola have the lowest petrol prices of $0.028 (Shs101.8) and $0.327 (Shs1,189), respectively, while the Central African Republic has the costliest petrol across Africa, retailing at $ 1.824 (Shs6,632) a litre, according to GlobalPetrolPrices.com.
