Why Uganda’s fuel prices are not rising as fast as elsewhere

As fuel prices swing wildly across global markets—buffeted by geopolitical tensions in the Middle East, supply chain disruptions, and fluctuating demand—Ugandan motorists have experienced something rare: relative price stability at the pump.

While drivers in neighbouring countries have endured sudden spikes and unpredictable changes, fuel prices in Uganda have largely held steady. This has prompted a key question among consumers and businesses alike: who is keeping Uganda’s fuel prices in check, and how?

According to the Uganda National Oil Company (UNOC), the answer lies in a deliberate state-led strategy that prioritises supply security and price moderation over short-term profit.

Since assuming exclusive responsibility for the importation of petroleum products under the Petroleum Supply (Amendment) Act, 2023, UNOC says it has focused on insulating the local market from the worst shocks of international price volatility.

“We took over the responsibility of importing fuel to ensure steady supply and stability,” said Tony Otoa, UNOC’s Chief Corporate Affairs Officer, in a recent interview. “Our objective is to make sure the country remains ‘wet’—that fuel is available at all times.”

In industry terms, keeping a country “wet” means prioritising uninterrupted supply, even when global conditions make imports expensive or logistically complex. For Uganda—an economy heavily dependent on road transport—any disruption in fuel supply can quickly cascade into higher food prices, rising transport costs, and inflation across the board.

Stability Despite Structural Disadvantages

Uganda’s fuel market operates under significant constraints. The country imports all its refined petroleum products through the Kenyan port of Mombasa, meaning fuel must travel hundreds of kilometres inland before reaching Kampala and other towns.

Yet UNOC argues that despite these logistical hurdles, Uganda’s pump prices remain competitive within the region.

“If you compare our fuel prices with those of our neighbours, you will find that Uganda is lower, yet we transport fuel all the way from Mombasa,” Otoa said.

Fuel imported through the Northern Corridor supplies the entire country—from urban centres to far-flung border districts in eastern, northern, and western Uganda. Maintaining relatively uniform affordability across such distances, UNOC says, reflects tight coordination of supply and pricing discipline.

Many Ugandans initially expected that prices would drop sharply once UNOC took over importation and removed private middlemen. But Otoa cautions that fuel pricing is still largely dictated by global dynamics.

Crude oil production levels, conflicts in oil-producing regions, shipping costs, and currency movements all feed into final prices. What UNOC does, he says, is absorb short-term shocks to prevent abrupt increases from reaching consumers.

“In all honesty, our prices are fair and have remained largely constant,” he said. “Even when there are changes in the global market, we step in to sustain those changes until things stabilise.”

That intervention, UNOC argues, prevents panic buying, hoarding, and speculative pricing—behaviours that can amplify volatility and destabilise markets.

What Consumers Are Noticing

For ordinary Ugandans, the difference is increasingly visible.

Samson Tinka, a farmer in Nakasongola District, says he used to track fuel prices almost obsessively.

“Every morning, I would check the price boards to see if prices had changed overnight,” he said. “Before, prices would jump suddenly, and almost always upwards.”

Since UNOC assumed direct importation, he says, those sharp overnight fluctuations have largely disappeared. “There is now some predictability. That helps people plan.”

Predictable fuel prices are particularly important for farmers, transporters, and small businesses whose margins are easily eroded by sudden cost increases.

Why Prices Still Differ at the Pump

Despite the relative stability, motorists still encounter different prices at different fuel stations—sometimes within the same town. UNOC says this is not evidence of manipulation but a function of Uganda’s liberalised fuel market.

“We supply all oil marketing companies at the same wholesale price,” Otoa said. “Whether it is Shell, Stabex, Oilcom or any other company, the price from UNOC is uniform.”

Once fuel leaves UNOC’s depots, however, pricing decisions are made by individual oil marketing companies. Rent, transport logistics, branding costs, staffing, and business strategy all influence the final pump price.

“You may find diesel at Shs4,300 at one station and Shs4,800 at another. That difference is controlled by the stations themselves, not UNOC,” Otoa explained.

The situation, he said, is no different from consumer goods pricing, where the same product can cost more in an upscale shopping area than in a neighbourhood shop.

Market Freedom Versus Consumer Protection

UNOC maintains that its mandate is not to regulate retail prices but to ensure fair access to fuel for all oil marketing companies.

By selling fuel at a uniform wholesale price, the company says it creates a level playing field and encourages competition—allowing consumers to shop around while discouraging monopolistic behaviour.

Analysts note, however, that price variations also place responsibility on consumers to remain informed, especially during high-demand periods such as festive seasons.

Looking Ahead

As Uganda moves closer to commercialising its own oil resources, UNOC says the lessons from fuel importation—supply security, discipline, and strategic intervention—will remain central to its role.

For now, the company insists that amid global uncertainty, Uganda’s fuel market is holding steady.

“We have maintained supply and moderated prices,” Otoa said. “That stability ensures the country does not experience disruptions.”

For motorists navigating an unpredictable global oil landscape, that assurance may be almost as valuable as the fuel itself.