Pan African Global Business chairman Captain Mike Mukulu says Uganda’s dependence on imported petroleum leaves consumers exposed to exchange-rate and global oil shocks, even when national fuel stocks are sufficient.
Pan African Global Business chairman Captain Mike Mukulu has blamed the weakening shilling and disruptions to global oil supplies for rising fuel prices, warning that Uganda’s reliance on imported petroleum leaves consumers exposed to external shocks.
Mukulu says Uganda has sufficient fuel stocks, but the weakening shilling increases the local-currency cost of importing petroleum products, leaving motorists and businesses vulnerable to developments beyond the country’s control.
“Uganda has sufficient fuel stocks, but the challenge is the exchange rate. When the shilling weakens against the dollar, the cost of importing petroleum products increases,” Mukulu said.
He explained that the dollar, which previously exchanged at about Shs3,700, had risen to approximately Shs4,100, increasing the amount of local currency required to purchase fuel from international suppliers.
The exchange-rate pressure compounds changes in global oil prices, which Mukulu attributed to strong demand and supply disruptions linked partly to the Russia-Ukraine war and attacks on Russian oil infrastructure.
For Uganda, which relies on imported petroleum products, the developments underline the difficulty of keeping pump prices stable when both the cost of oil and the cost of purchasing dollars rise.
President Museveni, speaking during Uganda’s 64th Independence Day celebrations at State House Entebbe on October 9, also attributed rising fuel prices to international conflicts and the weakening shilling, saying the government would not use foreign exchange reserves to prop up the currency.
Instead, he urged Ugandans to reduce reliance on imports and consume locally made products.
“Ugandans should instead reduce dependence on imported products and start consuming locally made products. That's the only way they may not feel the cost of the dollar,” Museveni said.
Mukulu also pointed to discussions between United States President Donald Trump and Russian President Vladimir Putin over oil prices, expressing hope that diplomatic efforts to lower international prices could ease pressure on fuel-importing countries.
“If the cost of oil on the international market comes down, countries like Uganda that depend on imported petroleum products could benefit through reduced pressure on fuel prices,” Mukulu said.
However, lower international oil prices would not automatically translate into immediate relief at Ugandan fuel stations if the shilling remained weak or other import and distribution costs stayed high.
The immediate challenge for policymakers and industry players is therefore how to reduce Uganda’s vulnerability to external price shocks and limit the effect of fuel costs on transport fares, the movement of goods and household budgets.
Mukulu’s remarks point to the role of exchange-rate stability and international oil prices in determining pump prices, but he did not outline specific domestic measures to reduce the burden on consumers.