Uganda Pump Oil Prices up, again

Ugandan motorists have to are not about to get any reprieve from rising petrol prices, a situation that is likely to push commodity prices up and slow down government’s efforts to curb inflation. By close of business yesterday, a litre of petrol at the pump on average cost Shs3, 800 up from Shs3, 690.

The irony is that, this is happening even as the price of a barrel of crude oil which is usually the cause of the hike at the international market has slipped.

An industry player who preferred anonymity, said: “The reason why prices are high is because at the time when the product (petrol) was imported into the country, the international prices were still high, so we have to factor in these costs”.

The source explained that usually when imports are brought into the country, their prices are determined by the price of a crude oil per barrel at the international market and these stocks are usually purchased and shipped months.

Giving his validation about the high local pump petrol prices, Shell Country Manager, Mr Ivan Kyayonka said: “It’s not only the issue of the international prices but also the reason for the hike is because of the volatility of the dollar against the local currency”.

However the other products like diesel and Kerosene prices instead were going down. On average diesel costs Shs3500 while Kerosene is at Shs3, 000. An industry expert however predicted that the next consignment of imports could lead to a marginal decline in the prices at the end of this month.

Experts in the industry explain that, fuel being a complimentary product, when its prices gone up, it negatively affects the economy as prices of other products and services go up.

This scenario is a further sting to the consumers who are getting to terms with last week’s news from the Uganda Bureau of Statistics which warned that prices of goods would remain high.

UBOS report said, despite the persistent decline in inflation for six months in a row, consumers will still have to face off the pressure of high commodity prices.

Consumers would expect that a fall in inflation correspondingly results in a drop in commodity prices, which is currently not the case, due to what experts attributed to food supply shocks that are brought about by delayed rains and volatilities in global oil prices.

However, Dr Chris Ndatira Mukiza, director macro-economic statistics at UBOS said the current fall in inflation depicts that the pace at which commodity prices are increasing is slowing down but not the actual fall in prices. Prices can only start falling if inflation declines to negative digits.

By DOROTHY NAKAWEESI
The Monitor Newspaper
09-May-2012