The Ugandan government has attributed the recent surge in fuel pump prices to a combination of international petroleum prices, taxation, and exchange-rate movements. According to Minister of Energy Monica Musenero, the current pump-price pressures reflect several interconnected costs affecting the petroleum supply chain. These costs range from international markets and foreign exchange to domestic taxes and transportation.
Musenero explained that the movement in the exchange rate from approximately 3,790 Uganda Shillings per US Dollar at the beginning of September to approximately 4,035 Shillings per US Dollar today translates into an estimated additional cost of about 300 Shillings per litre, purely from the exchange-rate movement. The Minister also cited the increase in excise duty on petrol and diesel for the financial year 2026/2027 as a contributing factor to the price pressure.
The Excise Duty (Amendment) Act, 2026, increased the applicable excise duty on both petrol and diesel by 200 Shillings per litre, effective July 1. Musenero stated that this additional tax, together with the depreciation of the Uganda Shilling and movements in international petroleum prices, has progressively increased the cost reflected in the domestic market.
The Minister rejected calls for a uniform pump price, citing Uganda's liberalized petroleum market. In this market, the Ministry does not prescribe a uniform pump price for oil marketing companies. Instead, prices are determined by several factors, including international product prices, exchange rates, procurement arrangements, transportation and logistics costs, operating and financing costs, competition, station ownership, and the commercial margins of individual oil companies.
Musenero's explanation came amid concerns over significant differences in fuel prices between Kampala and upcountry markets, particularly in the Karamoja sub-region. A September 8th market surveillance exercise found petrol selling at about 6,850 Shillings per litre and diesel at 7,099 Shillings in Moroto, compared with 6,650 Shillings and 6,800 Shillings respectively in Kampala. This represented a difference of about 200 Shillings for petrol and 299 Shillings for diesel.
Despite concerns over fuel prices, Minister Musenero assured Parliament that Uganda's current fuel stocks were sufficient to meet national demand. She said the government was strengthening supply resilience through coordinated procurement and supply management by the Uganda National Oil Company (UNOC). The government is also exploring alternative supply routes through Tanzania, including a refined-products pipeline and storage facilities at Tanga.
The Ministry of Energy plans to develop regional petroleum storage infrastructure aimed at reducing transportation costs by bringing bulk fuel closer to major consumption centres. Additionally, the government plans to add a 10-million-litre petrol tank to the existing 30-million-litre Jinja Storage Terminal, while the planned 320-million-litre Kampala Storage Terminal is expected to serve as a strategic distribution hub.
Key points
- The Ugandan government attributes rising fuel pump prices to global petroleum prices, taxes, and shilling depreciation.
- The government has assured Parliament that current fuel stocks are sufficient to meet national demand despite pressures in the international petroleum market.
- The Ministry of Energy plans to develop regional petroleum storage infrastructure to reduce transportation costs and improve supply security.
