The Minister of Energy, Dr Monica Musenero, has attributed the recent increase in petroleum pump prices in Uganda to the weakening of the Uganda shilling against the US Dollar, higher excise duty, and rising international petroleum prices.
Presenting a statement on petroleum product pricing to Parliament on October 6, 2026, Musenero explained that Uganda operates a liberalised petroleum market, meaning the government does not set a single pump price for all Oil Marketing Companies (OMCs).
She said fuel prices at retail stations are determined by several factors, including international petroleum prices, exchange rates, procurement arrangements, transportation and logistics expenses, volumes handled, operating and financing costs, and the commercial margins established by individual OMCs.
According to Musenero, the exchange rate has become one of the major domestic factors increasing the cost of imported petroleum products.
She said the Uganda Shilling weakened from approximately Shs3,790 per US Dollar in early September 2026 to about Shs4,035 by October 5.
Because Uganda imports refined petroleum products, the minister explained that a weaker Shilling increases the cost of each shipment even when international petroleum prices remain unchanged.
The Ministry estimates that the exchange rate movement alone has added approximately Shs300 per litre to fuel costs.
Higher Excise Duty Adds to Fuel Price Pressure
Musenero also pointed to increased excise duty introduced during the 2026/27 financial year.
Under the Excise Duty (Amendment) Act, 2026, the excise duty on petrol and diesel was increased by Shs200 per litre, effective July 1, 2026.
She said the additional tax, combined with the weaker exchange rate and fluctuations in global petroleum prices, has gradually increased the prices faced by consumers in Uganda.
Why Fuel Costs More in Karamoja and Other Regions
The minister also addressed concerns over higher fuel prices in Karamoja, particularly those raised by the Nabilatuk Member of Parliament.
She explained that differences between Kampala and upcountry markets do not automatically mean that fuel companies are applying excessive mark-ups.
According to Musenero, OMCs pay the same applicable loading price at the relevant terminals in Kenya and Tanzania, but their costs can differ after the fuel leaves those facilities.
These additional costs include transportation, volumes handled, contractual arrangements, operating and financing expenses, safety requirements and investment in service stations.
Market surveillance conducted on September 8, 2026, found petrol selling at approximately Shs6,850 per litre in Moroto, compared with Shs6,650 in Kampala.
Diesel was selling at around Shs7,099 per litre in Moroto, compared with approximately Shs6,800 in Kampala.
This amounted to regional price differences of about Shs200 per litre for petrol and Shs299 for diesel.
Musenero said the differences were not determined by distance alone. She said supply arrangements, operational efficiency, sales volumes, commercial strategies and the ability of individual companies to absorb logistics costs also influence prices.
She added that smaller and remote markets such as Nabilatuk can experience unusual market conditions when limited infrastructure and weak competition create circumstances similar to a local monopoly.
The government therefore considers factors such as market structure, competition, infrastructure and actual supply costs when assessing regional fuel price differences.
Government Monitoring Fuel Prices
Despite acknowledging legitimate logistical costs, Musenero warned that such expenses should not be used to justify unexplained or excessive fuel margins.
She said the Petroleum Supply Department monitors pump prices and engages OMCs whenever significant pricing anomalies are identified.
She cited Adjumani as an example, saying Universal Energy was issued a default notice after public complaints and media reports raised concerns about its fuel prices.
The company was asked to explain its pricing, after which the department determined that the prices reflected accumulated costs from several purchases. The operator was subsequently advised to bring its prices in line with the prevailing regional market.
Global Petroleum Market Adds Pressure
Musenero also linked Uganda’s fuel price pressures to conditions in the international petroleum market.
She cited disruptions affecting petroleum production and transportation in the Middle East, as well as restrictions affecting international fuel trade, as factors contributing to global market pressure.
She referred to a BBC News report published on October 2, 2026, which reported that the average UK diesel pump price had risen above £2 per litre for the first time, illustrating the wider international pressures affecting refined petroleum products.
Uganda Plans Measures to Strengthen Fuel Security
To improve the country’s resilience to external supply disruptions, Musenero said the government is pursuing coordinated petroleum procurement and supply management through the Uganda National Oil Company (UNOC).
Uganda is also engaging Kenya on a Product Sharing Exchange Framework while exploring alternative supply routes through Tanzania.
These plans include a refined petroleum products pipeline and storage facilities at Tanga.
In the medium term, the government expects strategic inland fuel reserves and expanded storage capacity, including facilities in Jinja, to provide additional protection against international supply disruptions.
Musenero also announced plans for the Strategic Regional Petroleum Storage Infrastructure Project, which will establish storage terminals in phases along major supply corridors, including Northern Uganda.
The project is intended to bring bulk petroleum products closer to major areas of consumption and improve the country’s ability to respond to supply interruptions.
The planned addition of a 10-million-litre petrol tank to the existing 30-million-litre Jinja Storage Terminal is expected to increase national fuel reserves.
Government is also supporting the 320-million-litre Kampala Storage Terminal, which is expected to operate as a major strategic fuel distribution hub.
Musenero assured Parliament that Uganda currently has adequate fuel stocks and confirmed incoming cargoes, providing a stable supply outlook.
She said the Ministry would continue monitoring national fuel stocks, global petroleum market developments and pump prices, particularly in remote and border areas such as Karamoja.
The minister said the government’s approach is focused on maintaining reliable fuel supplies, strengthening market monitoring and enforcement, and reducing structural supply-chain costs through improved storage and distribution infrastructure.
She added that the government remains committed to maintaining a stable and competitive petroleum market capable of supporting households, transport, agriculture, industry and the broader economy.
Musenero also encouraged Members of Parliament and members of the public to report suspected unjustified fuel pricing, illegal diversion of petroleum products or artificial shortages through the established reporting channels.
