Govt Attributes High Fuel Prices to Unstable Exchange Rate

Government through the Minister of State for Energy, Simon D’ujanga has attributed the spike in fuel prices across the country to the interplay of the crude prices and refinery premiums as well as the unstable exchange rate.

The Minister made the remarks while presenting a statement on the floor of Parliament in response to a matter of National Importance that was raised by Kyaka South MP, Jackson Kafuuzi. Last week, Kafuuzi tasked government to come out and explain the increment in the prices.

He as well appealed to government to intervene and ensure the consumers are protected from the exorbitant prices.

On Tuesday, the Minister said that Uganda is still a net importer of petroleum products in a liberalized downstream petroleum market where the prices are purely determined by the forces of demand and supply in accordance with the provisions of the Petroleum Supply Act, 2003.

D’ujanga as well noted that there has been a growing consumption of petroleum products by 9.6% within the last two years adding that the country now consumes a monthly average of 174 million litres of fuel compared to last year’s 168 million litres.

Of this volume, 91% is imported through Mombasa port and 9% through Dar es Salaam port.

“To meet this demand, the strategies developed to keep the country well supplied hinge on the effectiveness of the import routes and the in-country storage facilities,” the Minister told the House.

“In this case, Mombasa and Dar es Salaam ports together with other terminals in Kenya are all being utilized by Oil Marketing Companies (OMCs) to import products into Uganda,” D’ujanga said.

He explained that Uganda being a landlocked country and a net importer of refined petroleum products, pump prices are a result of international prices of crude oil, refinery gate prices for products as well as the United States Dollar exchange rate against the Ugandan Shilling.

The other push factors, he said, are surplus logistical costs which include port handling fees, transit handling charges, storage fees, transportation, taxes, clearing and marking fees.

The Minister also said that the current fuel prices are partly a result of increased refinery premiums in the Open Tender System since July 2018.

“With the measures put in place to ensure a steady supply of petroleum products and fair competition in the downstream petroleum sub-sector, my Ministry will continue to monitor the sub-sector and engage the oil marketing companies to ensure that the citizens continue to get value for money from the consumption of petroleum products,” said the Minister.