Fuel climbs to Shs 5400 per litre

Fuel prices in Uganda have reached an all-time high, with petrol now priced at Shs 5,400 per liter and diesel at Shs 4,800 per liter.

This comes on the heels of a recent government statement issued on September 5, 2023, in which state minister of Energy and Mineral Development, Sidronius Okassai, stated that the government would not intervene in fuel pricing. The minister attributed the soaring costs to external factors.

Minister Okassai elaborated, “The surge is driven by global factors beyond Uganda’s control, limiting what the ministry of Energy can do. Increased global oil demand, 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 worldwide rise in fuel costs.”

On Monday morning, major petrol stations such as Shell Mulago listed petrol at Shs 5,400 per liter, while local stations like City Oil Kamwokya priced it at Shs 5,530 per liter. Diesel was available for Shs 4,800 per liter.

The sharp rise in Uganda’s fuel prices has been further aggravated by fluctuations in the exchange rate. The USA dollar is now trading at Shs 3,770, up from Shs 3,719 on September 1, 2023, impacting fuel prices.

Additionally, the OPEC+ cartel’s decision to cut oil production by three million barrels per day, aimed at stabilizing and increasing oil prices, has influenced the market. As a result, Brent crude oil prices have reached $92 per barrel, with OPEC members pricing it at $96.62 per barrel.

This is a notable increase from the 2020 benchmark oil price of $68 per barrel. OPEC has extended its production cut until 2024 due to unfavorable market conditions.

The ongoing Russia-Ukraine conflict has also contributed to the price surge. Russia’s reduction in Urals crude production, a retaliatory measure against Western-imposed oil price caps, has further tightened the global oil supply, thereby increasing Russia’s oil revenues.

When reached for comment, neither the public relations officer of Total Energies nor the ministry of Energy and Mineral Development provided a response regarding the elevated fuel prices.

Uganda operates a liberal economy, and the government does not have direct control over fuel market prices, which are dictated by supply and demand. Currently, Uganda imports its fuel from Kenya, reported to be the most expensive source in the East African region.