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New survey reveals reasons as to why fuel prices are still high

After weeks of fuel prices rising, the government eventually suspended the testing of truck drivers for Covid-19 at the border, which it blamed for the crisis.Last month, government revealed that pump prices would normalize after it had allegedly sorted out the fuel supply challenges.However, nothing has thus far materialized after the proclamation, as pump prices are still above Shs5,000, which is an average increase of Shs400 from the price before the crisis hit the country at the close of 2021.In a survey conducted by a local newspaper last week, the average price for petrol is Shs5,080 per litre while diesel is Shs4,330.The survey notes that during the 2021/2022 Financial Year, government increased excise duty on fuel from Shs1,350 to Shs1,450 per litre of petrol. The tax on diesel rose from Shs1,030 to Shs1,130 per litre.Experts say this is partly to blame for high pump price but it is not enough to explain the sharp increase in the last two months, which some believe is spurred by price manipulation.Earlier on this month, the state minister for minerals Peter Lokeris, told Parliament that fuel prices would normalize mid-February.However, there is still no sign that fuel prices will normalize any time soon.Dr Patricia Litho, the head of communication at the Ministry of Energy and Mineral Development, said the oil prices have gone up on the global market and this has not helped Uganda’s situation.“Even when we negotiate with our service providers, we have got to look at how much they can actually procure or buy,” Dr Litho said.She added that as much as the issues have been addressed, the initial projection for prices to go down is not working out because of global trends.Hans Paulsen, the Vivo Energy executive vice president East and South Africa, said: “The fuel prices have gone up drastically in the last 12 months by about 70 percent, returning to levels we last saw in 2013-2014.”Paulsen added that this was due to a spike in demand following the full reopening of global economies.“During the lockdowns there was excess product on the market and low demand in the world. However, what has surprised everyone is the speed at which the global economies have bounced back restrictions lifted,” he notes.

International politics

Experts have also blamed the rising fuel prices on the ongoing tensions between Russia and Ukraine.Francesco Martoccia, a global oil expert notes that the tension between Russia and Ukraine has accounted for an additional $10 (Shs35,000) per barrel of fuel pushing the prices above $90(Shs316,000). Were it not for that factor, prices were expected at around $80 (Shs281,000) per barrel.Regional statusUnlike Uganda where prices are determined by market forces, in Kenya and Rwanda, prices are controlled. The controls are usually supported by subsidies that help to keep prices with in affordable amounts even when there are global challenges.

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