Government has attributed the rise in fuel pump prices to a combination of international petroleum prices, taxation, exchange-rate movements or depreciation of the Uganda Shilling, freight, insurance and other supply-chain costs.
The Minister of Energy, Monica Musenero, on Wednesday told Parliament that the current pump-price pressures reflect several interconnected costs affecting the petroleum supply chain, from international markets and foreign exchange to domestic taxes and transportation.
This was carried in her statement to the House on the current pricing of petroleum products in the country.
“Based on the Ministry’s current assessment of the product cost, the movement in the exchange rate from approximately Shillings 3,790 per US Dollar at the beginning of September to approximately Shillings 4,035 per US Dollar today translates into an estimated additional cost of about UGX 300 per litre, purely from the exchange-rate movement,” the Minister said.
Musenero also attributed part of the price pressure to the increase in excise duty on petrol and diesel for the financial year 2026/2027. She said the Excise Duty (Amendment) Act, 2026 increased the applicable excise duty on both petrol and diesel by Shillings 200 per litre, effective July 1.
“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,” Musenero said.
The Minister also rejected calls for a uniform pump price. She explained that Uganda operates a liberalised petroleum market in which the Ministry does not prescribe a uniform pump price for oil marketing companies.
She said 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.
The explanation came amid concerns over significant differences in fuel prices between Kampala and upcountry markets, particularly in the Karamoja sub-region.
The Minister said differences in pump prices do not necessarily constitute unjustified mark-ups because oil marketing companies incur varying costs after receiving products at the relevant terminals in Kenya and Tanzania.
She cited a September 8th market surveillance exercise which found petrol selling at about Shillings 6,850 per litre and diesel at Shillings 7,099 in Moroto, compared with Shillings 6,650 and Shillings 6,800 respectively in Kampala. This represented a difference of about Shillings 200 for petrol and Shillings 299 for diesel.
Musenero, however, cautioned that legitimate logistics costs should not be used to justify excessive or unexplained margins. She said the Petroleum Supply Department monitors prices and engages oil marketing companies where anomalies are detected.
Minister Musenero also assured Parliament that Uganda’s current fuel stocks were sufficient to meet national demand despite pressures in the international petroleum market.
She said disruptions to production and transportation in the Middle East, constraints on refined-product supplies and restrictions on international fuel trade had contributed to global price pressures.
Government, She said, was strengthening supply resilience through coordinated procurement and supply management by the Uganda National Oil Company (UNOC). Uganda is also engaging Kenya on a Product Sharing Exchange Framework and pursuing alternative supply routes through Tanzania, including a refined-products pipeline and storage facilities at Tanga.
The Ministry is also developing regional petroleum storage infrastructure aimed at reducing transportation costs by bringing bulk fuel closer to major consumption centres.
Musenero said the planned infrastructure would improve supply security and access in western, northern and north-eastern Uganda.
Additionally, the Minister told Members of Parliament that government also 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.
Musenero said Government’s petroleum pricing approach is centred on maintaining reliable supplies, strengthening market surveillance and enforcement, and reducing structural supply-chain costs through improved storage and distribution infrastructure.
She said Government would intervene where market conduct leads to unjustified price increases or threatens security of supply. Musenero committed that the Ministry of Energy will continue monitoring petroleum stocks, incoming cargoes, international market developments and pump prices, including in remote and border markets such as Karamoja. However, a section of Members of Parliament demanded urgent measures to contain the fuel prices.
Joel Ssenyonyi, the Leader of the Opposition said Government should prepare for possible fuel supply disruptions linked to anticipated instability in neighbouring Kenya, which is due to hold elections next year.
“We are praying for Kenya. We hope that the elections go alright. But you see, even in our homes, before we go to sleep we pray and after praying you check to be sure the door is closed,” Ssenyonyi said.
He said Government should therefore prepare for any disruption rather than relying on favourable circumstances. Ssenyonyi also criticised Government for increasing excise duty on petroleum products by Shillings 200 per litre in the 2026/2027 financial year, despite warnings during the budget process.
The Minister of Defence and Veteran Affairs, Kiryowa Kiwanuka said Uganda’s fuel prices were being driven primarily by international developments because the country currently relies entirely on imported petroleum products.
He said the price of Brent crude rose from Shillings 71 per barrel on July 1 to Shillings 106.69 by September 15, representing an increase of about 40 per cent. “So invariably it is going to affect our price here,” Kiwanuka said.
He emphasized that Uganda was currently not facing a fuel shortage but rather a price problem.
“The issue is the price of that fuel. So right now, as the issues escalate in the Middle East, we are seeing these price fluctuations are really driven at that level,” he said. He urged Ugandans to reduce unnecessary fuel consumption, including avoiding unnecessary movements.
Isaac Ismail Otimgiw, the Padyere County MP called for temporary tax relief on petroleum products, citing measures taken by other countries to cushion consumers.
“We should also consider offering temporary tax relief. We have seen our neighbors in Kenya, do it. They have lowered their VAT from 16% to 8% to try and cushion the price of pretroleum products.” Otim appealed.
Achia Remigio, the Pian County MP said the fuel crisis should be addressed as part of a broader economic problem, particularly the depreciation of the Shilling.
“We need to sit together and develop a comprehensive plan to address this matter, for our own survival as a country,” Achia said.
Masaba Karim, the Mbale City Industrial Division MP called for the suspension of the Shillings 200 excise duty increase.
“As Cabinet you need to look just beyond what you are going to collect but how it’s going to affect the economy,” Masaba said.
Deputy Speaker, Thomas Tayebwa subsequently deferred the debate, saying fuel prices could not be considered separately from the wider state of the economy.
“The debate will continue when we are discussing the general statement on the state of the economy, with major focus on the dollar rate and share prices,” Tayebwa said.
He said the Ministry of Finance, Ministry of Energy, Bank of Uganda and Uganda Bureau of Statistics would contribute to a comprehensive statement on the economy, with particular focus on the exchange rate-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
