Aug 9, 2022

Mawazo Writing Africa

Writing about the main

Oil prices begin cooling off but no relief yet for East Africa

Barely two weeks after fuel prices in Uganda surpassed US$6,000 ($1.61) per liter for either petrol or diesel, the government says it has no solutions to cut prices at the pump, even if they do are inaccessible to drivers. due to global dynamics in Eastern Europe.

There are also fears that next month’s Kenyan general election could disrupt supplies.

“We anticipate what prevails in the global market. said Rev Frank Tukwasibwe, Oil Supply Commissioner at the Ugandan Ministry of Energy. As the war between Russia and Ukraine, which sparked a surge in global crude oil prices, enters its fifth month, crude oil prices plummeted this week, raising some optimism that there could be international domino downstream effects.

< p>But industry players remain cautious and say that while a drop in crude oil prices is good, motorists in East Africa will continue to feel the high prices at the pump until mid-August should prices continue to fall.

“I’m starting to see some good news on the price of crude oil,” said Boniface Kipchirchir, operations manager at Stabex International Uganda. “We expect prices to fall and maybe stabilize next month. But Kenya’s election could disrupt supplies to Uganda even after prices have stabilized.”

On July 5, Brent Crude traded below $100 a barrel for the first time in three months, but rose back above $100 the West Texas Intermediate, the US benchmark, fell to 98.53 on July 6.

Crisis Levels

Motorists have borne the brunt of rising fuel prices for 12 months – the longest period in the US region – but in Uganda it reached crisis levels from January this year, when a protest by truck drivers against mandatory Covid-19 testing led to a raid on the Kenyan border and blocked oil supplies for weeks /p>

A few weeks later, geopolitical tensions escalating into the ongoing war between Russia and Ukraine saw prices soar from below $80 a barrel in early 2022 to over $100 a barrel currently, with price increases surging the gas pump, m sometimes twice in one day. Azed Kakooza, a tour operator, for example, refueled his Toyota Hiace in Kampala on July 1 at Ush 6120 ($1.64) for a morning trip to Iganga in eastern Uganda. On his return he wanted to fill up for the next day’s journey, but found that the price at the same petrol station had gone up by Ush 30.

In Kenya, pump prices have risen since the beginning of the year and are continuing to do so with the planned removal of fuel subsidies.

Since January, petrol and diesel prices have risen by over 22 percent and are currently at a record high, even without the fuel subsidy catering for around Ksh 30 (0 $.25) per liter.

However, Kenya’s Treasury Ministry said last month that it would phase out the subsidy starting in July.

“The cost of fuel subsidies could eventually impact its budget allocations in the national budget, potentially escalating national debt to unsustainable levels and thwarting the government’s plans to reduce debt accumulation,” Finance Minister Ukur Yata said ni.

In April, Kenya faced a spate of shortages that nearly paralyzed commercial activity across the country, which was blamed on late deliveries. The ministry provided overdue subsidies to oil marketers.

However, it later emerged that oil marketers had deliberately hoarded supplies in anticipation of higher retail prices following a review by the Energy and Petroleum Authority (Epra). , which actually raised official pump prices for the first time this year.

At the time, Epra increased fuel prices by Ksh 9 (USD 0.086) to Ksh 144.62 (USD 1.25) per liter of premium petrol and Ksh 125 . 5 ($1.09) for diesel. It further raised retail prices in the two subsequent reviews in May and June.

Now premium petrol is Ksh 159.12 ($1.35) and diesel is Ksh 140 ($1.19) and could rise proceeding to the next review, scheduled for July 14.

Read:High fuel and commodity prices dampen Museveni’s first year in his sixth term

< h3>Currency fluctuations

Currency fluctuations h3>

Daniel Kiptoo, Epra’s general manager, said the increase in pump prices was necessitated by rising global crude oil prices and a continued devaluation of the currency, which caused the made imports more expensive.

Pumps in Rwanda Prices hit record highs despite government subsidies to cushion consumers.

Rwanda’s supply regulator announced new pump prices to be applied from June 10 to June 31. July came into effect, with the maximum retail price being R WF is 1,460 ($1.40) per liter and diesel is RWF 1,503 ($1.40) per liter.

“Fuel pump prices have been revised due to adjustments in the international market,” said R Ura said in a statement.

The regulator of energy and water utilities in Tanzania also raised fuel prices on July 6 to 3,220 Tsh (US$1.38) per liter for gasoline 3,143 Tsh (US$1.35 ) for diesel and 3 thousand 442 ($1.48) for a liter of kerosene.