Uganda’s attempt to lower fuel prices in Kampala through a direct purchase agreement with Vitol Bahrain has failed to achieve its intended outcome. This week, diesel prices in Kampala rose to $1.38 per litre from $1.37, while petrol prices increased to $1.47 from $1.46. Consequently, Kampala has now surpassed Nairobi as the city with the highest fuel prices in East Africa.
In Nairobi, a litre of diesel costs $1.32, and petrol is priced at $1.45. This stark contrast highlights Uganda’s struggle to reduce fuel costs despite its new import deal.
Last year, President Yoweri Museveni announced that the agreement with Vitol Bahrain was expected to lower fuel prices by cutting out “middlemen” involved in Kenya’s government-to-government fuel deals with Gulf oil majors. Museveni suggested that these intermediaries were responsible for inflating fuel prices in Uganda.
The Uganda National Oil Company (UNOC) secured a five-year import deal with Vitol Bahrain, and the first shipments of petrol and diesel arrived earlier this month. These new shipments were anticipated to ease fuel costs but have not yet brought the expected relief.
Several factors contribute to the ongoing high fuel prices in Uganda. The country’s logistical and infrastructure challenges, including inefficient distribution networks and high operational costs, continue to affect fuel prices. Additionally, fluctuations in global oil prices and local taxes further impact the cost at the pump.
Efforts to improve Uganda’s fuel pricing situation face several hurdles, including the need for broader reforms in the fuel distribution sector and addressing underlying issues in the supply chain.
As Uganda grapples with these challenges, consumers continue to bear the brunt of high fuel prices, affecting transportation costs and overall living expenses. The government is under pressure to find effective solutions to stabilize and reduce fuel costs for its citizens.
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