Energy ministry explains hike in fuel prices

In a statement issued on Tuesday, September 5, 2023, the Ministry explained that the hike in fuel prices is being caused by rise of the United States dollar caused by a cut in oil production by major oil producing countries.

Currently, a litre of petrol stands at sh5,100 and shsh5,430, while most petrol stations are selling a litre of diesel at sh4,999 and sh5,200.

The Ministry’s spokesperson, Solomon Muyita, said that the hike in fuel prices puts Uganda in a difficult position since the country is an importer and not a producer of oil.

“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.

He added: “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.”

Oil-producing countries in the Organisation of Petroleum Exporting Countries (OPEC) have restarted a strategy of cutting oil supply on the market, citing a drop-in oil prices as global economies recover from Covid-19.

Several OPEC members announced 1.2 million b/d collective cuts in May 2023, while Saudi Arabia reduced a further 1 million b/d in July, which has been prolonged until September.

Russia has also stated that it will reduce 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.