According to Prime Minister Robinah Nabbanja Musafiri, the increase in fuel prices was due to the general opening of the economy from the lockdown, leading to increase in demand for fuel. The mandatory Covid-19 testing of fuel truck drivers at the borders caused delays in the movement of fuel trucks which might have also contributed to the rising fuel prices due to scarcity.
With the increased public outcry on high fuel prices, the prime minister ordered all fuel pumps not to sell above Shs 5,000. Currently a litre of petrol costs between Shs 5,200 and Shs 5,690 while diesel costs slightly above this, averagely across the country.
So did petrol stations adhere to the prime minister’s order or she just ordered without consultation?
The government has also attributed the increase in fuel prices to the tension between Russia and Ukraine which has limited oil exploitation and have led to an increase to $10 per barrel thus pushing our fuel prices. Fuel being a major driver that moves all other sectors, its price rise has automatically increased the cost of doing business and increase in the general price all over Uganda.
For example, today a bar of soap (White Star) costs Shs 7,000 and above, cooking oil Shs 9,500 a litre, sugar Shs 4,000 a kilogram etc and manufacturers lament that such price increase is due to increase in direct costs and raw materials fuel inclusive.
The crisis was at its worst from January 14-18, 2022 when many petrol stations in Kampala and across the country ran out of fuel leading to sharp rise in prices. Many people have opted to leave their motor vehicles at home and resorted to public transport.
The government has deliberately kept a deaf ear as regards high fuel prices and has left fuel companies to dictate how much they would wish to charge at any time. Large fuel companies such as Shell and Total sell at abnormal prices compared to their counterparts which leaves many Ugandans with a lot of questions as to whether the fuel supplier is different, or the quality of fuel differs from one petrol station to another.
In fact, there is an allegation that fuel from Total and Shell is of higher quality compared to that from other petrol situations. The question is, is ’Who is responsible for controlling fuel quality in Uganda?’
Whereas many East African countries like Rwanda, Tanzania have subsidized fuel prices, especially in times of scarcity, Uganda has deliberately failed to intervene in the rising fuel prices thus leaving the forces of demand and supply to determine fuel prices.
The recent presidential address on the economy left many citizens perturbed, with the head of state presenting no hope to the hungry angry poor population. Uganda’s economic growth has been slowed, unemployment worsened, business collapse and increased crime rates. It has resulted in protests due to high cost of living, a case in point is the recent/on-going demonstration led by Dr Kizza Besigye though not registering any success.
What should be done?
There is need for price legislation by the government to reduce consumer exploitation. The government should set a maximum price above which fuel companies must not exceed, purposely to minimize the rate of price increase.
The government should refill and construct more fuel reserves which can supply fuel especially in periods of crises. The government should invest in electrified transport means to reduce the usage of fuel in the transportation of goods and movement of people.
This will also indirectly assist in sustainable environmental protection through reduction in air pollution which would otherwise adversely affect people’s health. Subsidize or reduce taxes on fuel imports. Fuel companies have always complained about taxes hence if the government reduces the taxes on fuel, prices are likely to equally reduce, eventually reviving the economy.
The government should quicken the exploitation of the available fuel reserves such that we reduce dependence on fuel imports which are characterized by several negative eventualities that lead to supply rigidity.
Continued government indifference to the public outcry on fuel prices will largely affect the economy in form of reduced fuel consumption, business collapse, increased crime rates especially among youths and a rise in poverty levels.
At worst, it may trigger public demonstrations which may not be an ideal approach towards raising voices to address citizens’ priorities.
Authored by Kiberu Jonah, Vicent Kibira and Angelica Namanda Tracy
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