Fuel prices stay high as Ugandan’s learn that global economic principles may not apply to them


(Posted 20th January 2015)

While everywhere in the East African region do lower crude oil prices translate into lower prices at the pumps, this does not seem to be happening in Uganda. The broad economic factors across East Africa are by and large the same and inflation and currency adjustments vis a vis the US Dollar too are following similar trends in Kenya, Tanzania, Rwanda and Uganda.

Yet, energy moguls in Uganda are publicly turning economic fundamentals on their head when trying to tell the country why fuel in the Pearl of Africa should cost unproportionally more here than for instance in neighbouring Kenya or even Rwanda, where fuel prices have dropped further and faster than here.

Safari operators who had hoped that the collapse of the global oil prices will result in lower operating costs for their tours however are still waiting to see any of the 50 percent drop in crude oil prices translate into such savings, keeping them, and the nation, puzzled and increasingly angry.

This is what has been happening with the price of AVGAS for a long time. Here in Uganda it costs significantly more than in Nairobi, Kisumu or even Mwanza, the latter two airports also having relatively higher landing cost for this type of aviation fuel. Even the cost of JetA1 in Uganda is higher than it should be and the oil companies blame it on the cost of transport. Now the same thing is happening with the cost of diesel, kerosene and petrol. The oil companies are getting a huge profit windfall from all of this and when you do not see even one of the multinationals brake ranks, you know that there is a cartel at work to rob Ugandan’s blind at the pumps’ commented an aviation source who in the past regularly complained about the aviation fuel supplies in Uganda to artificially keep the cost of AVGAS high.

Notably has government so far stayed out of the brewing controversy while in neighbouring Kenya was their government proactive and had fuel prices significantly slashed by the Energy Regulatory Commission. Tanzania’s Energy and Water Regulatory Authority reportedly did the same while Ugandan’s are left out of seeing any such benefits come their way. It is little wonder that the first signs on social media are now emerging with the hashtag of #Occupy, a clear indication that consumers are getting sick and tired of being exploited.

Uganda’s own crude oil production, for a number of reasons, has been delayed by several years while arguments rage on over the ultimate decision to refine all the crude eventually pumped in Uganda or find the means to build a highly complex pipeline, which due to the nature of Uganda’s crude oil must be heated 24/7 to keep the black gold from turning into a solid mass. Fodder for thought no doubt.

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