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BUSINESS

Fuel prices soar, private sector concerned over effect on businesses, cost of living

Pump prices for fuel up again. (FILE PHOTO)

KAMPALA– Pump prices for fuel have gone up again, with petrol standing at Shs4, 400, and diesel at Shs4, 140 leaving the already burdened consumers to pick the bills.

Today most fuel stations, especially in Kampala, had already increased pump prices for petrol and diesel by at least by Shs400 and Shs450 respectively.

A litre of petrol has increased by an average of Shs400 while diesel by Shs450; indicating a 9 percent and 10 percent increase, respectively.

Reports from various drivers interviewed by PML Daily indicate that the prices have been increasing since January with no sign of coming down, even as factors that are blamed for influencing the soaring prices seem to have stabilised.

The government imposed Shs100 Excise Duty on diesel and petrol in a frantic attempt to raise what it described as funds for road maintenance this financial year.

Mr Gilbert Assi the Vivo Energy Managing Director said the increase had been occasioned by the recent taxes on petrol and diesel.

“As of today (yesterday), we have increased pump prices of petrol and diesel. And this is as a result of a series of changes including exchange rates, international oil prices and importantly, government duty (taxes) on petrol and diesel,” he said.

Mr Ali Sserumaga, a manager at Petrol Uganda said the current increase has been influenced by international prices in the months of September and October.

He said three factors, including the exchange rate regime, international prices and the Shs100 Excise Duty have been the main reasons for the movement of fuel prices this year.

“And of all factors, the dollar has kept going up against our local currency, this is so bad because our purchases are made in dollars,” said Mr Sserumaga, November 14.

Mr Gideon Badagawa, the Private Sector Foundation Uganda, Executive Director, said the increments will negatively impact cost of doing business and prices of other commodities.

“Cost of production will go up as a result of this increment. And this means that our industries will not be able to compete both in the region and internally and you know that the final burden goes down to the final consumer,” Mr Badagawa said.

“High fuel costs will result into high cost of doing business and transportation and this will automatically impact the final price of the commodity and thus increase in inflation,” Mr Badagawa says.

He advised government to find a way of establishing a fuel reservoir to control volatility and save the local people in Uganda both consumers and businessmen “and without this, businesses could begin to consider scaling down operations and in the worst close”.

Impact on economy

According to Mr Ramadhan Ggoobi, an economist at Makerere University Business School, the increase in fuel prices will lower aggregate demand as prices of goods increase.

“Fuel is a major component in everyday business and this is likely to affect the exchange rate as well as transport costs so the earlier government responds, the better. And do you know that the immediate effect will feed into commodity prices which are likely to drive inflation high.”

Mr Ggoobi added.

Increments

Petrol Shs400

Diesel Shs450

New prices

Petrol Shs4, 400

Diesel Shs4, 140

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