In early January 2025, Ugandan motorists observed a sudden increase in fuel prices, with petrol rising from an average of UGX 4,860 to UGX 5,040 per liter, and diesel from UGX 4,770 to UGX 4,990.
This unexpected rise follows a period of declining prices after the government, through the Uganda National Oil Company (UNOC), assumed sole responsibility for importing petroleum products in July 2024. The initiative aimed to reduce costs by eliminating middlemen, leading to a drop in petrol prices below UGX 5,000 per liter by December 2024.
Despite the government’s efforts, the recent price hike has puzzled consumers and experts alike. Key factors influencing fuel prices include international crude oil prices, exchange rates, and inflation. While the Ugandan shilling has remained relatively stable against the US dollar, and inflation is below the Bank of Uganda’s 5% target, international crude oil prices have risen by 29%, closing at $80.21 per barrel. However, experts argue that this increase is insufficient to justify the sudden spike in local pump prices.
Peter Ochieng, a regional fuel trade expert, stated, “I do not see any fundamental reason for a price increase,” noting that both international crude prices and the exchange rate have been stable over the past three months. UNOC’s Chief Corporate Affairs Officer, Tony Otoa, confirmed that their pricing structure to oil marketing companies has remained unchanged since they took over imports.
In contrast, Anthony Ogalo, General Manager of the Sustainable Energy and Petroleum Association of Uganda, contends that oil marketing companies are responding to international market movements, which he describes as a normal trend in commodity marketing.
The Ministry of Energy is currently analyzing the situation. Assistant Commissioner for Communication and Information Management, Patricia Litho, stated, “We are still observing this quarter and making an analysis,” without providing further details.
Uganda continues to have some of the highest fuel prices in East Africa, with petrol averaging $1.371 (UGX 4,983.7) per liter. Unlike neighboring countries, Uganda does not subsidize or control fuel prices, leaving consumers vulnerable to market fluctuations.
As the government and industry stakeholders investigate the causes behind the recent price surge, consumers are urged to stay informed and seek clarity on the factors influencing fuel costs in the country.
