Uganda is facing a dilemma as fuel prices continue to rise – affecting several parts of the economy such as food, transportation and other service delivery sectors that depend on it.
As of today, fuel prices are now at Shs 6,200 per litre at some major fuel distribution stations which have gravely affected the service transportation sector with travellers and Ugandans alike feeling the pinch by the week leading many to speculate that the prices could reach Shs. 10,000.
Motorists have continued to grapple with persistent high fuel prices, forcing some to park their cars and occasionally use them on weekends.
When the crisis hit the country in late 2021, nobody anticipated that there would be a drastic increase in fuel prices by an average of Shs 1,400. Starting in January 2021, the prices for fuel were at an average of Shs 3,770 but by late December, they had hit Shs 4,610.
Uganda now faces a tougher situation as the oil and gas industry tumbles through a volatile period brought about by external and internal factors, as the economy had begun to adjust to the recently lifted lockdown brought about by the pandemic. Some experts say that the government has failed to anticipate and handle these factors or underestimated them.
By December 2021, a litre of petrol cost Shs4,580 yet demand was low due to restrictions in certain sectors of the economy. During the 2021/2022 Financial Year, the government increased excise duty on fuel from Shs1,350 to Shs1,450 per litre of petrol. The tax on diesel rose from Shs1,030 to Shs1,130 per litre.
Uganda faces a tough road ahead as fuel prices hit 6,000
Based on the previous trends, the fuel prices have been increasing steadily by an average of Shs 150-200 or more per month with some regions in Uganda already past that mark. For example, in some parts of the Kalangala islands, a litre of petrol currently goes for Shs 8,000, which has also forced fishermen to suspend fishing reports Monitor.
Below is a trend for petrol prices shared by Total Energies and other fuel stations;
- January 2021 – 3,770
- February 2021 – 3,770
- March 2021 – 3,800
- 2nd April 2021 – 3,800
- 25th April 2021 – 4,080
- May 2021 – 4,080
- June 2021 – 3,930
- August 2021 – 4,090
- September 2021 – 4,090
- October 2021 – 4,140
- November 2021 – 4,300
- December 2021 – 4,610
- 9th January 2022 – 4,640
- 30th January 2022 – 5,020
- February 2022 – 5,000
- March 2022 – 5,150
- April 2022 – 5,290
- 8th May 2022 – 5,310
- 22nd May 2022 – 5,530
- 21st June 2022 – 5,940 (Shell)
- 26th June 2022 – 6,140 (Shell)
- 27th June 2022 – 6,160 (Shell)
Meanwhile, with the diesel prices going higher than those of petrol. It has affected the entire supply and value chain since most buses, lorries, construction and farming equipment, generators, and other power equipment all use diesel to operate.
This has in return translated to delayed supply schedules or has increased the cost that is being passed onto the consumers especially produce to the market and construction materials to mention but a few. Some of the products or inputs transported are used in making beverages and food such as flour for bread, meat, milk, and sugar which automatically have increased the cost of living.
Hopefully, the rising costs and living standards will be curbed by implementing preventive or corrective fiscal policies and other measures before we slide into creeping inflation where fuel will be at UGX 10,000 before year-end even if such a price increment is highly unlikely at the current progression. Only time will tell.
Experts have said that the current fuel price situation is partly to blame for high pump prices, but it is not enough to explain the sharp increase in the last six months as some believe it is spurred by price manipulation. Early this year, the State Minister for Minerals, Mr Peter Lokeris, told Parliament that fuel prices would normalise in mid-February but instead, they have continued to surge.
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