Govt explains escalating pump fuel prices

The Ministry of Energy and Mineral Development has explained that high fuel prices are due to external factors, where producers have scaled down on production.

The ministry spokesperson, Solomon Muyita, on Wednesday, attributed fuel high prices to demand and supply in the global oil market. World oil use hit a record high of 103 million barrels a day in June and is likely to grow further. The demand is expected to average a record-setting 102.2 million barrels a day this year.

He also disclosed that Uganda has licensed many private oil marketing companies and prices are determined by forces of supply and demand.

“Uganda is a net importer of all petroleum products. So, we receive the prices which are on international market,” he said.

“We are still importing 100%. So, when the prices go up, we also suffer,” he added.

Petrol and diesel prices have increased at various fuel stations in Kampala, with a litre of petrol sold between sh5490 to sh5530 and diesel from sh4900 to sh5100.

Muyita said the energy ministry’s work is to put in place a mechanism to ensure a free and fair market and stop people from smuggling fuel because they have a liberalised petroleum industry in Uganda.

However, the energy ministry spokesperson is optimism that when Uganda starts fuel production in 2025, costs for transportation of fuel from other countries will reduce.

“For example, the cost for transportation of fuel from Singapore to Uganda will reduce and Ugandans will be closer to the source. This means we shall be able to enjoy a slightly cheaper fuel price at the pump,” he said.

CNOOC and TotalEnergies co-own all of Uganda's existing oilfields alongside the state-run Uganda National Oil Company (UNOC). At peak, Uganda plans to produce about 230,000 barrels of crude oil per day. The country's crude reserves are estimated at 6.5 billion barrels, of which 1.4 billion barrels are recoverable.