KAMPALA, UGANDA: Sky-high fuel prices are biting the country hard and have pushed higher the already high commodity prices. This undeniable reality of the high cost of urban living has forced many people in the capital to cut back on consumption. Many have parked their vehicles, creating more legroom for maneuvering on Kampala’s usually congested narrow roads.
There’s a noticeable let-up in traffic jam on major city roads during rush hours. Some of the known pain points are navigable now. Fuel prices have continued to climb. A litre of petrol oscillates between Shs 6,100 and Shs 6,210 and diesel sells between Shs 6,000 and Shs 6,160.
According to Aliziki K. Lubega, the director of Economic Statistics at the Uganda National Bureau of Statistics (Ubos), the cost of goods climbed between April 2021 and April 2022 including; food and non-alcoholic beverages, transport fares, personal care, social protection, and miscellaneous goods, furnishings and household equipment.
Between March and June 2022, the price of laundry soap shot up from Shs 3,500 to Shs 6,000, diesel from Shs 3,500 to Shs 6,000, cement from 35,000 to 42,000, and maize flour from Shs 1,700 to Shs 3,400, among others.
According to Ubos, inflation in the country is about to break the seven percent ceiling. Annual headline inflation, which is measured by the consumer price index for twelve months is currently at 6.3%, up from 4.9% recorded in April – an indicator that things could get worse before they become better.
The minister of Finance, Planning and Economic Development Matia Kasaija has since tagged the rise in commodity prices to Russia’s invasion of Ukraine and shortage of fuel on the market. Since May 2022, Kenya and Tanzania tried but later abandoned fuel subsidies.
Commenting after Kenya announced it was abandoning fuel subsidies, Permanent Secretary and Secretary to the Treasury (PSST) Ramathan Ggoobi said; “End of debate. Subsidies appeal to the ordinary folk but are not sustainable.”
“Market price signals created by forces of supply and demand are painful in the short run but are realistic and sustainable. Fuel is in short supply worldwide. So, the most realistic solution is to cut demand,” Ggoobi said.
The high prices have indeed cut demand for fuel countrywide as Ugandans abandon their vehicles. Interviewed for a comment, a fuel pump attendant at Total, Ntinda filling station, said sales have dropped drastically since a litre of fuel hit the Shs 6,000 mark.
“We now go for a long time before we get clients. Customers used to come every time but the trend has changed. The situation is worse,” she said, adding, “It is rare to see a client coming to fill a full tank except for companies.”
An insider at Shell, Port Bell road said the rise in fuel prices has slightly affected them.
“I can barely remember the price of fuel before because the increment has been outrageous. Within a week, we were forced to make price changes three times. Before the increment, fuel prices ranged between Shs 3,000 and Shs 4,000,” he said.
“For us at Shell, the number of clients purchasing fuel has not declined and we attribute this to the fact that Shell has not compromised on the quality of fuel,” he added.
“The number of sales we make depends on the days. There are good and bad days. Before the increment, Shs 50,000 gave a client about 15 litres. But now Shs 50,000 can’t get you 10 litres of fuel,” he said.
“If I have a target of selling 200 or 250 litres in a day, the high prices make it very difficult for me to hit my targets,” he added.
At Gaz station in Ntinda, the station supervisor said, “We increase prices based on our clients’ feedback. Two days back, we increased the price of petrol from Shs 5,850 to Shs 5,990 and diesel from Shs 5,750 to Shs 5,900. Our sales have decreased with clients using cash to purchase fuel.”
The company has also become creative. It gives discounts to cashless customers.
“We make more sales with Visa cards and we are giving our clients discounts. Right now we don’t reach 10,000 litres in sales per day yet before we would sell over 15,000 litres in just one shift (eight hours) and this has greatly affected our margins,” the supervisor said.
Valery Okecho, the Corporate Communications manager of Vivo Energy said, Shell Uganda remains the cheaper option throughout the country.
“There is a shortage of fuel in the global market. You are aware of the challenges that happened at the border of Uganda and Kenya in January [2022] when drivers went on strike and Kenya’s decision to fill their fuel reserves – that contributed to a fuel shortage,” he said.
“We want to support the government to see that there is sufficient stock of fuel in the country despite all the challenges,” he said.
Paul Musinguzi, a businessman in Kampala, said high fuel prices have increased the cost of living and doing business in the country and the world.
“Fuel prices are going up and there is no hope that they will go down. In the next few months, we shall wake up to a litre buying Shs 10,000 at fuel stations,” he said.
“I stay in Ntinda-Kigoowa and our weekly budget for fuel was around Shs 250,000 for the cars we use at home. We oscillate between Ntinda, Makerere, parliament, and Kanyanya. Given the fuel crisis, I had to convene a meeting at home because we were spending a lot. I said look, fuel prices have gone up and the problem is here to stay. What can we do?” he said.
He said the family resolved to abandon the Mercedes Benz, Prado, and Subaru. They resorted to driving Toyota Succeed, Nissan Juke, and boda-bodas. Musinguzi said the cost of running his home has increased too.
“As you are aware, the prices of food, and fuel almost doubled; so, we had to cut costs on transport to bridge the gap. I can’t tell our weekly budget for food because we buy plenty. The 10kg pack of posho increased from Shs 13,000 to Shs 34,000, prices of soap shot up from Shs 3,500 to Shs 7,000…,” he said.
Why cars are parked
Ronald Ayella, a resident of Bukoto, a Kampala suburb, said he had been forced to readjust his spending priorities. “I plan my various errands now. When I have to drive, I do all my tasks at the same time. This is one of my major behavioral changes to counter the high prices,” he said.
“High prices have forced me to embrace technology to cut fuel costs. I don’t go to the bank anymore; I use online banking services. My purchasing power has reduced. I used to buy one kilogram of sugar at Shs 3,000 but now I am forced to buy one at Shs 4,500 to 6,000. I used to spend Shs 50,000 on fuel a week but now I spend Shs 80,000,” he added.
“I have been forced to park my car at home and use a boda boda (motor taxi) to work. I have done this twice a week for the last two months. I drive a Mark X with a 2.5cc capacity. I would need about 16 litres to run for a week, which is very expensive now that a litre of fuel costs between Shs 5,000 to Shs 6,000,” another gentleman said.
Peter Kabanda, a businessman in Kireka, said, “At a personal level, it has affected me. I have to drive to Kyengera every day from Kireka. In the past, that would cost me around Shs 40,000 per day to and from work but in the current situation I have to spend between Shs 60,000 and Shs 70,000.”
“I park my car most of the time to cut on transport costs and for the past two months, I only use my car twice a week,” Kabanda adds.
Stanley Othin, a resident of Tororo, said, “My movements are now occasional because fuel is expensive. In Tororo, I only use my car if it’s an emergency. I have resorted to using a bicycle for shorter distances and a boda for places that are far.”
“I have a Toyota Fielder with a 1.5cc capacity. Before the price hike, I used to spend Shs 20,000 on fuel in a week but now I need between Shs 70,000 and Shs 100,000 to be able to move without any inconvenience,” Othin said.
A resident of Kabembe in Mukono, who preferred anonymity, said, “I particularly parked my car not because I don’t have money for fuel but I find myself in a dilemma. I can’t meet my basic needs, which was not the case back then before the outbreak of Covid-19. I strongly believe we are in this pathetic state because of the pandemic.”
“My car is not functioning the way it used to before the lockdown. I always had a full tank, but now, I have to calculate my movements. When I drive to Kampala, I leave the car parked in Mukono.”
Source: Observer
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