Old Pipeline Holding Uganda Economy at stand still

UGANDA: For the last one week, Uganda experienced a biting fuel shortage leading to significant increases in prices of petroleum products and threatened to cripple the economy of the landlocked country. The shortage has been blamed on supply hiccups on the Kenyan petroleum supply system and a new system of clearing cargo imported into the region. Some major towns are reported to have been low on fuel supplies, resulting in panic buying among motorists. Prices increased by between KSh6 and KSh10 a litre, to retail at USh3,800 (KSh135), up from USh3 600 (KSh128).

Retail prices of petroleum products in Uganda are determined by the market, which is unlike the situation in Kenya, where prices are capped. It is not the first time the country is experiencing fuel supply shocks and as in past cases, Kenya’s petroleum supply system is partly to blame for the shortages experienced in Uganda. A new system of clearing petroleum products, where marketers importing fuel to Uganda through Mombasa are required to clear the products under the Single Customs Territory, is partly contributed to the shortage.