BUSINESS | COSTS | IMPORTS 

KAMPALA - The cost of Uganda’s imports is expected to rise following a decision by Kenya Transporters Association (KTA) to increase its transport costs by a minimum of 5% after the Kenyan government announced new fuel prices. 

Rajni Tailor, the chairperson of Petroleum dealers in Uganda on Tuesday said the decision by KTA could affect Uganda and the neighbouring countries. 

“This will automatically affect Uganda and neighbouring countries like Rwanda, South Sudan and Democratic Republic of Congo; besides, the increment of fuel import prices is currently over $160 a barrel,” Tailor said.

Thaddeus Musoke, the chairman of Kampala City Traders Association (KACITA), noted that the decision by KTA comes in the wake of inflation that has affected traders in Uganda. 

“Most Ugandans have been asking KACITA so many questions. We had engaged all government agencies to see how we can amicably find possible solutions. With this new development, we are going to write to the Ministry of Trade, Ministry of Finance, Parliament of Uganda to try and see the way forward,” Musoke said. 

He noted that the prices of several commodities across the country had increased before the decision by KTA. 

“What is going to happen next? How will the ordinary Ugandan survive with this inflation?” Musoke said. 

Kenya exports machinery and transportation equipment either assembled locally or not, petroleum products, iron and steel, resins and plastics among others to Uganda while its port of Mombasa is also a major gateway for East Africa with Uganda's share of imports and exports amounting to 82% of all transit cargo through this port. 

Most of the imports and exports are transported by KTA. On Monday, KTA in a notice to its members said the government of Kenya through the Energy and Petroleum Regulatory Authority (EPRA) had increased the pump prices for petrol and diesel.

“This is in response to the recent increase in fuel landed costs and the depreciation of the Kenya shilling. KTA commends the government of Kenya for its efforts to cushion the full impact of the increase through the Petroleum Development Levy (PDL). However, the Ksh5 (sh17.5) increase in the pump price of diesel and petrol will affect transportation costs adversely,” KTA chairman Newton Wang’oo said. 

Wang’oo said fuel costs contribute up to 35% of total direct transport costs and indirectly affects other costs like tyres and spare parts since they are all imported.

“Transport rates have remained the constant from the period when the diesel pump prices (Mombasa) were between ksh75-80 (sh2,775-sh2,880) per litre compared to the current Ksh108-110 (sh3,888-3,960) per litre. The transporters’ margin can no longer sustain any increase in costs and regrettably have to pass on this increase to cargo owners for the road transport sector to survive,” Wang’oo added. 

Wang’oo further said, “KTA wishes to advise transporters countrywide to increase their transport costs by a minimum of 5% to sustain their businesses under the current circumstances and to circumvent a total collapse of their businesses.” 

In December last year, the build-up of petroleum trucks at Uganda’s border with Kenya after Uganda’s Ministry of Health announced $30 fee for COVID-19 tests caused a spike in the prices of fuel with some fuel stations in Hoima selling petrol at sh12,000 per litre. 

Despite the Government scrapping the fee and directing fuel dealers to sell fuel at sh5,000 the current price remains sh5,120 in many of the stations around the country. 

The commissioner in charge of petroleum supply and distribution, Rev. Frank Justave Tukwasibwe, says the rise in fuel prices is not unique to Uganda.

“It is global, not that it is unique to Uganda, but it has affected us so badly compared to others. That is why we are saying that our regulation is to ensure adequate supply in a free and competitive environment,” Nkwasibwe said. 

However, others have attributed the sharp increase in prices to a move by the Uganda Revenue Authority to certify importers and avoid the dumping of goods destined for the Democratic Republic of Congo and South Sudan.