By Elias Biryabarema, Citizen Correspondent, Kampala
The government yesterday warned oil companies against overcharging customers as the fuel shortage spreads to western Uganda, pushing the price of petrol up to Ush3,500 per litre.
Junior Energy Minister Kamanda Bataringaya delivered the warning at a press conference on Saturday morning in Kampala, which had been called to respond to growing public angst over the rising price of fuel and its intermittent supply.
"We'll certainly not allow these companies to exploit customers," Dr Bataringaya said without specifying what punitive action government would mete out to guilty companies.
Although the government does not fix fuel prices in Uganda, the minister said that oil companies were expected to price their products reasonably to reflect the market dynamics.
"We can't determine for these companies what they charge for their products but we are in discussion with them to ensure that prices remain within acceptable range," he said.
Pump prices for petrol and diesel in Uganda have escalated sharply over the last fortnight despite the world oil price falling from a high of $147 per barrel of crude oil in July to around $50 on Friday —a decline of 65 per cent.
The fall in the world oil price has not been passed on to Ugandan consumers and the Executive Director of the Uganda Manufactures Association Gideon Badagawa told Sunday Monitor earlier in the week that the way pump prices were being manipulated in Uganda bore the hallmarks of a cartel hell-bent on profiteering.
"If a barrel drops by such a margin and the local companies increase prices, then the government should be investigating the possibility of a cartel. Otherwise there doesn’t seem to be any sound explanation for the increase in pump prices," he said.
Dr Bataringaya yesterday gave reasons for the disruption in the supply of fuel and its price remaining high, including problems with the Kenya oil pipeline, the escalation of the dollar against the shilling, and increased piracy in the Indian Ocean which has raised insurance premiums.
Other reasons included a new axle-rule on trucks that has reduced the amount of fuel imported into the country from 90,000 cubic metres to 85,000 cubic per month and problems with border customs clearance.
The shortage, which has also led to a shortage of liquefied petroleum gas used for cooking, spread westward yesterday.
In Mbarara, the commercial hub of the South Western region, fuel supplies sharply dipped and by Friday most stations had run dry.
The few that had fuel spiked prices to Ush3,500 and Ush2,700 for a litre of petrol and diesel, respectively, representing an average increase of more than Ush600 to the litre price and seriously impacting the price of foodstuffs.
"For three days running now we have not been with petrol and diesel," a pump attendant at Petro Uganda on Mbarara High Street told Sunday Monitor.
Other towns across the country also reported shortages and queues by motorists at the few filling stations that had supplies.
The price surge has led to an increase in transport fares up-country.
The fare for the Fort Portal-Bundibugyo route has, for instance, doubled from Ush5,000 to Ush10,000 while Fort Portal to Kasese now costs Ush6,000 up from Ush4,000.
The price of a litre of petrol in Kabarole rose from Ush2,750 to Ush4,000 in two days.
But the minister did not comment on the fact that insurance contracts are not increased overnight and he also failed to explain why the supposed rise in insurance costs were apparently only impacting pump prices in Uganda and not other regional countries like Kenya, Rwanda and Tanzania.
Dr Bataringaya said the government could not rein-in extortionist pricing by petroleum dealers because the country runs a market economy.
Kenya and Tanzania have, however, warned oil companies operating in the two countries to adjust their prices to reflect a reduction in the world oil price or face punitive measures and yet they essentially run the same type of economic system like Uganda.
Dr Bataringaya said the government was appealing to oil companies to buy more truck tankers to ferry in more fuel and considering tax incentives for companies that import fuel through the Dar es Salaam route.
