The Total billing board showing the fuel prices in Kampala.

The rising fuel prices in Uganda have left everyone concerned.

A litre of petrol is now at Shs4,600, and could hit the Shs5,000 mark, according to analysts.

But in neighbouring Kenya, this is not the case.

The Kenya Energy and Petroleum Regulatory Authority (Epra) is running a fuel subsidy scheme whereby fuel dealers are compensated by government to keep the fuel prices low.

The subsidy scheme is supported by billions of shillings raised from fuel consumers through the Petroleum Development Levy. The fund is meant to cushion consumers from volatility in fuel prices.

For instance, currently, Epra has kept diesel and petrol prices unchanged at KSh110.60 (Shs3,492.41) and KSh129.72 (Shs4096.16), respectively.

Without the subsidy, Kenyan motorists would be paying KSh143.48 (UGX 4530.66) per litre of petrol and KSh126.28 (UGX3987.54) for diesel in what could have stoked pressure on inflation.

In Kenya, the majority of households rely on kerosene and LPG for lighting and cooking, making crude price a key determinant of the rate of inflation.

The economy also uses diesel for transportation, power generation and running of agricultural machinery such as tractors, with a direct impact on the cost of farm produce.

But can a subsidy help Uganda?

“Well, well a subsidy would go a long way but is it a priority now?” Mark Keith Muhumuza, a business analyst, says.

“A subsidy could work but that requires a supplementary budget request. Reserve option also on the table but is this a crisis yet?” he adds.

But Muhumuza adds that Uganda can turn to its 30 million litre fuel reserve facility in Jinja to stabilise the prices.

Jinja Storage Terminal (JST) was renovated in 2018.

The facility was built after in 2007, Uganda recorded an over 100% jump in pump prices due to shortage of fuel caused by the bloody 2007 Kenyan post-election violence that cut off importation of the product through Mombasa Port.