Kampala, Uganda | By Michael Wandati | Fuel prices in Uganda have recently hit a historic high, with petrol now commanding a price of Shs 5,400 per liter and diesel priced at Shs 4,800 per liter.
This surge in fuel prices in Uganda follows a recent government announcement on September 5, 2023, by the State Minister of Energy and Mineral Development, Sidronius Okassai. Minister Okassai stated that the government would not be intervening in fuel pricing and pointed to external factors as the driving force behind the escalating costs.
According to Minister Okassai, “The sharp increase in fuel prices can be attributed to global factors beyond Uganda’s control, constraining the actions of the Ministry of Energy. The heightened demand for oil worldwide, particularly during the summer months in Europe and the United States, has significantly impacted oil prices. Economic activity and seasonal trends have also contributed to the overall rise in fuel costs.”
Major petrol stations like Shell Mulago listed petrol at Shs 5,400 per liter on Monday 2, October 2023 morning, while local stations such as City Oil Kamwokya priced it slightly higher at Shs 5,530 per liter. Diesel remained available at Shs 4,800 per liter.
The fluctuation in exchange rates has further exacerbated the increase in Uganda’s fuel prices. The US dollar is now trading at Shs 3,770, up from Shs 3,719 on September 1, 2023, which has had a direct impact on fuel prices.
In addition to these factors, the OPEC+ cartel’s decision to reduce oil production by three million barrels per day, aimed at stabilizing and boosting oil prices, has had a significant influence on the market.
Consequently, Brent crude oil prices have surged to $92 per barrel, with OPEC members pricing it even higher at $96.62 per barrel. This marks a notable increase from the 2020 benchmark oil price of $68 per barrel, and OPEC has opted to extend its production cuts until 2024 due to unfavorable market conditions.
The ongoing conflict between Russia and Ukraine has also played a role in the price escalation. Russia’s reduction in Urals crude production, seen as a retaliatory measure against Western-imposed oil price caps, has further tightened the global oil supply, resulting in increased oil revenues for Russia.
When contacted for comment, neither the Public Relations Officer of Total Energies nor the Ministry of Energy and Mineral Development provided any response regarding the elevated fuel prices.
It’s important to note that Uganda operates a liberal economy, and the government does not directly control fuel market prices, which are determined by the forces of supply and demand.
Currently, Uganda imports its fuel from Kenya, which is reported to be the most expensive source in the East African region.