Government should regulate fuel prices

Saturday April 17 2021
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As a general rule, about two-thirds of your cost of fuel at the pump is determined by crude oil cost. PHOTO/EDGAR R BATTE

By Editor

This week, local fuel pump prices went up twice, triggering fears among members of the public that the negative ripple that usually follows could affect the economy.

As of Friday morning, a litre of petrol was being sold at Shs4,150, up from Shs4,050, while diesel was being sold at Shs3,710, up from Shs3,630.

The increase in prices are being blamed on the global crude oil prices that have since December 2020 risen from $49.99 (about Shs181,000) to $65.41 (Shs236,000) per barrel as of last month. Today’s volatile crude oil prices are being blamed on slowing global demand, rising US oil production, diminished OPEC clout and rising dollar value.
Increased prices in Uganda usually mean high cost of doing business, effect on exchange rate as well as transport costs.

Whereas Uganda insists it has no control over fuel prices, governments around the region have found ways of cushioning their citizens from the volatility in the oil market.

Kenya, for example, has a mechanism of protecting fuel users from high prices. The Energy and Petroleum Regulatory Authority (Epra) has since 2010 been setting maximum fuel prices, which are determined every 15th day of the month and remain in force until the 14th day of the following month.

The government of Kenya also introduced the Petroleum Stabilisation Fund last year to protect its citizens whenever the cost of imported refined products steadily increases.

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In Tanzania, authorities last year ordered a crackdown on companies hoarding fuel after prices dropped in June. The Energy and Water Utilities Regulatory Authority, an autonomous multi-sectoral regulatory authority, is responsible for technical and economic regulation of the electricity, petroleum, natural gas and water sectors, meaning they also set the cap prices for petroleum products. 

Our neighbours to the southwest also have the Rwanda Utility Regulatory Authority that sets prices for fuel. 
These examples around the East African region show that protection of citizens against the sudden hike in fuel prices in the market is possible.

Even in Uganda itself, we have seen the Electricity Regulatory Authority that sets the tariff structure. Every quarter, ERA issues electricity tariffs to shield power consumers. The approved base electricity tariffs are subject to adjustment for changes in international prices of fuel, exchange rates, inflation and the generation mix.

It is high time Government of Uganda looked into its policy of leaving fuel consumers exposed to the mercy of the market and protect them like other governments in the region are doing. Because, as experts predict, such price increases can have a negative effect on the economy by causing inflation.

editorial@ug.nationmedia.com 


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