Uganda’s Ministry of Energy and Mineral Resources has explained that the hike in fuel prices is being caused by the rise in the US Dollar and the production cuts by oil-producing countries.
A litre of petrol now goes for between Shs5,100 and Shs5,430, while diesel, which had reached Shs4,600 at some stations, is now between Shs4,999 and Shs5,200.
According to the Ministry of Energy spokesman Solomon Muyita, Uganda’s hands are tired in such a situation since we are importers of fuel and not producers.
“There are a number of factors causing the hike in fuel prices we are experiencing right now, one of them being the exchange rate; the dollar has gone up. The oil producers also scaled down on production as they wanted to balance their markets,” he said in an interview on Monday, 04 September 2023.
“Uganda is a net importer of petroleum products. All the petroleum products we use in this country are from other countries until 2025 when we expect to have our own oil from the ground,” he added.
Oil-producing companies under the Organization of the Petroleum Exporting Countries (OPEC) have now resumed their strategy of reducing oil supply on the market amid what they call a decline in oil prices as global economies begin to recover from Covid-19.
In May 2023, several OPEC members announced 1.2 million b/d in collective cuts while Saudi Arabia cut an extra 1 million b/d in July, which has been extended through September.
Russia has also announced plans to cut oil exports by 300,000 barrels per day in September.
The Uganda Shilling has been sliding against the US Dollar. On Monday morning, the shilling traded at 3714.96 against the US Dollar. The GB Pound opened at 4686.79 and sold at 4686.40.