The depreciation of the Uganda Shilling against the US Dollar and an increase in excise duty on petroleum products are among the factors driving the recent rise in fuel prices, Energy Minister Dr Monica Musenero has told Parliament.
Presenting a statement on petroleum product pricing on October 6, 2026, Musenero said Uganda operates a liberalised petroleum market in which the government does not prescribe a uniform pump price for Oil Marketing Companies (OMCs).
“Rt. Speaker, Uganda operates a liberalised petroleum market in which the Ministry does not prescribe a uniform pump price for Oil Marketing Companies at their various retail outlets. Pump prices are influenced by a combination of factors,” Musenero said.
She said international petroleum prices, exchange rates, procurement arrangements, transportation and logistics costs, volumes handled, operating and financing costs, and commercial margins all contribute to the final pump price.
Musenero identified the exchange rate as one of the major domestic factors increasing the landed cost of imported petroleum products.
She said the Uganda Shilling weakened from about Shs3,790 per US Dollar at the beginning of September to approximately Shs4,035 by October 5, 2026.
“Since Uganda imports refined petroleum products, this depreciation directly raises the cost of each incoming cargo, even where international product prices remain unchanged,” she said.
According to the Ministry’s assessment, the exchange rate movement alone has added about Shs300 per litre to the cost of petroleum products.
Musenero said the pressure had been compounded by an increase in excise duty on petrol and diesel under the Excise Duty (Amendment) Act, 2026.
The amendment increased the applicable excise duty by Shs200 per litre, effective July 1, 2026.
“This additional tax, together with the depreciation of the Uganda Shilling and movements in international petroleum prices, has progressively increased the cost reflected in the domestic market,” Musenero said.
Addressing concerns over higher fuel prices in Karamoja, particularly in Nabilatuk, Musenero said differences between Kampala and upcountry markets did not necessarily amount to unjustified mark-ups.
She said OMCs receive the same applicable loading price at relevant terminals in Kenya and Tanzania but incur different costs after loading, including transportation, volumes handled, contractual arrangements, operating and financing costs, safety requirements and investment in service stations.
Citing market surveillance conducted on September 8, 2026, Musenero said petrol was selling at about Shs6,850 per litre in Moroto, compared with Shs6,650 in Kampala. Diesel was selling at about Shs7,099 in Moroto, compared with Shs6,800 in Kampala.
The differences were therefore about Shs200 per litre for petrol and Shs299 for diesel.
“These differences cannot be attributed to distance alone; they also reflect each OMC’s supply arrangements, operating efficiency, volumes, commercial strategy and ability to absorb logistical costs,” she said.
Musenero said smaller and remote markets such as Nabilatuk could experience unusual market conditions because of limited infrastructure and weak competition, creating conditions resembling a local monopoly.
“Government therefore considers market structure, competition, infrastructure and actual supply costs, not distance alone, when assessing regional price differences,” she said.
However, the minister cautioned that legitimate logistics costs should not be used to justify unexplained or excessive margins.
She said the Petroleum Supply Department monitors pump prices and engages OMCs where anomalies are detected.
“In Adjumani, following public complaints and media reports, Universal Energy received a default notice and was required to explain its pricing. The Department found that prices reflected cumulative costs from multiple purchases and advised the operator to align prices with the prevailing regional market,” Musenero said.
Musenero said Uganda’s domestic fuel price pressures were also occurring amid a stressed global petroleum market, citing disruptions to production and transportation in the Middle East and restrictions on international fuel trade.
She cited a BBC News report of October 2, 2026, which reported that the average UK diesel pump price had exceeded £2 per litre for the first time, as an illustration of the international pressures affecting refined petroleum products.
To strengthen Uganda’s fuel supply resilience, Musenero said the government was undertaking coordinated procurement and supply management through the Uganda National Oil Company (UNOC).
She said Uganda was also engaging Kenya on a Product Sharing Exchange Framework and pursuing alternative supply routes through Tanzania, including a refined petroleum products pipeline and storage facilities at Tanga.
“In the medium term, strategic inland stocks and improved storage, including at Jinja, will provide an additional buffer against external supply disruptions,” she said.
Musenero also disclosed plans for the Strategic Regional Petroleum Storage Infrastructure Project, which proposes phased regional storage terminals along key supply corridors, including Northern Uganda, to bring bulk petroleum products closer to consumption centres.
She said the planned addition of a 10-million-litre petrol tank to the existing 30-million-litre Jinja Storage Terminal would strengthen national fuel stockholding and the country’s capacity to respond to supply disruptions.
The government is also supporting the 320-million-litre Kampala Storage Terminal as a strategic distribution hub.
The minister however assured Parliament that the country’s October fuel stock position and confirmed cargoes provided a stable supply outlook.
She said the Ministry would continue monitoring fuel stocks, international market developments and pump prices, including in remote and border markets such as Karamoja.
“Our approach to petroleum pricing is anchored on three priorities: maintaining adequate and reliable supplies, strengthening market surveillance and enforcement, and reducing structural supply-chain costs through storage and distribution infrastructure,” she said.
“We remain committed to a stable, secure and competitive petroleum market that supports households, transport, agriculture, industry and the wider economy,” Musenero added.
