Ahead of the presentation of the Petroleum Supply (Amendment) Bill, 2023, the Ugandan government intensified criticism of oil marketing companies, accusing them of driving up fuel prices, which had previously peaked above Shs7,000 per litre. Fuel price instability had been a longstanding issue, becoming especially severe during the COVID-19 pandemic and the Russia-Ukraine war, which disrupted global supply chains and led to prices soaring to over Shs10,000 per litre.
For nearly three years, fuel prices fluctuated wildly, leaving Ugandans with little power to influence the market. Many believed the pricing system was manipulated by a cartel-like network. While fuel prices remained a politically sensitive issue, the government had traditionally left pricing to oil marketers and market forces, distancing itself from direct regulation. In contrast, other East African governments manage fuel prices more proactively, often subsidizing costs to prevent inflationary pressures, acknowledging fuel’s strategic economic role.
The turning point came in 2022 when the government signaled its intent to intervene in what it described as an exploitative fuel market. President Museveni openly criticized oil marketing companies, labelling them opportunistic. As a solution, the Ministry of Energy introduced the Petroleum Supply (Amendment) Bill, 2023, proposing to give the Uganda National Oil Company (UNOC) exclusive rights to import petroleum products.
This move was intended to eliminate the middlemen blamed for high prices and ensure steady national reserves. Energy Minister Ruth Nankabirwa predicted that the shift would reduce pump prices from the Shs5,800–6,000 range to below Shs5,000 within three months of implementation. Parliament passed the Bill, and by April 2024, UNOC had officially assumed the role of sole petroleum importer.
Initially, prices did dip below Shs5,000, offering hope to consumers. However, this relief was short-lived. By early January 2025, prices spiked again, exceeding Shs5,000 after a three-month average of Shs4,860 in late 2024. The causes behind the increase remained unclear, with both UNOC and oil marketing companies pointing fingers. UNOC maintained it had not changed its pricing formula, while marketers questioned how fuel costs could rise despite stable international markets.
Petrol prices settled at Shs4,999 for a few months but rose again in mid-May, reportedly due to delivery issues along the Kenyan supply route. In a June 3 statement, UNOC confirmed that certain areas were experiencing higher retail prices due to logistical delays but did not specify how long these disruptions would last. This came despite earlier promises that Uganda would maintain a 30-day fuel reserve buffer to avoid supply shocks.
Despite government control over imports, Uganda still has the highest fuel prices in East Africa. As per data from GlobalPetrolPrices.com, Ugandan petrol averages Shs5,047.3 ($1.388) per litre. This is higher than in Burundi (Shs4,883), Kenya (Shs4,876), Rwanda (Shs4,196), Tanzania (Shs3,985), and DR Congo (Shs3,741). Unlike its neighbors, Uganda does not subsidize fuel or directly regulate retail prices.
UNOC recently stated that it aims to stabilize supply and retail prices in the near term but stopped short of guaranteeing price reductions or parity with regional averages. More than a year since taking over, UNOC’s impact on reducing fuel costs remains questionable. Though Minister Nankabirwa has acknowledged a decline in prices over the past year, she expressed a desire for further reductions.
Fuel pricing depends on factors such as global oil prices, forex rates, and inflation. Yet, most of these indicators have remained relatively stable over the past year. Inflation edged up slightly to 3.8% in May, but remains below the central bank’s 5% target. Exchange rates have hovered around Shs3,636, and crude oil prices have shown only minor fluctuations, with a barrel closing at $63.22 recently.
Across Africa, Libya and Angola have the cheapest petrol at $0.028 (Shs101.8) and $0.327 (Shs1,189) respectively, while the Central African Republic tops the continent with prices at $1.824 (Shs6,632) per litre. As Uganda continues grappling with high fuel prices, the question remains: will the government deliver the affordability it once promised?