Uganda: Oil Companies Deny Govt Claims of Fuel Hoarding,

Uganda's oil marketing companies have flatly rejected government accusations that they are deliberately hoarding fuel supplies and inflating prices to exploit current market disruptions. The denial marks a sharp escalation in the standoff between the petroleum sector and Kampala's regulatory authorities, signalling deeper structural issues in the country's fuel supply chain that could reshape investor confidence in East Africa's energy corridor.

The government's hoarding allegations emerged as petrol and diesel prices climbed sharply across Ugandan pumps in recent weeks, squeezing transporters, manufacturers, and ordinary consumers. Officials suggested that fuel retailers were artificially restricting supply to drive margins higher—a charge the oil companies say is baseless and reflects a misunderstanding of regional logistics constraints and currency pressures.

## Why Are Fuel Prices Spiking in Uganda Right Now?

Oil marketers attribute the price increases to three external factors beyond their control: global crude benchmarks, the Ugandan shilling's depreciation against the US dollar, and supply bottlenecks from regional refineries in Kenya and Tanzania. Uganda imports over 95% of its refined petroleum products, making it vulnerable to forex volatility and transport disruptions along the Kenya-Uganda corridor. The shilling has weakened by approximately 8% year-to-date against the dollar, directly feeding into pump prices. Additionally, periodic maintenance at the Mombasa refinery and limited pipeline capacity from the Port of Dar es Salaam have constrained regional supply.

Government officials counter that market players have room to absorb some cost pressures without raising prices, and suggest that excess profiteering during supply crunches is now baked into the sector's behaviour. The Uganda Petroleum Authority (UPA) has indicated it is reviewing wholesale pricing structures and may impose stricter margin caps on retailers if the standoff continues.

## What Does This Mean for Uganda's Investment Climate?

The fuel dispute carries strategic implications for foreign direct investment in Uganda's nascent oil sector. Major oil companies—TotalEnergies, Equinor, and China National Offshore Oil Corporation (CNOOC)—have substantial upstream projects in the Albert Graben and are preparing to begin crude exports by 2026–2027. Investor confidence hinges on a stable, rules-based regulatory environment. Protracted friction between government and downstream players signals unpredictable policy enforcement and raises questions about Uganda's commitment to competitive market structures once oil production scales.

For domestic businesses, sustained high fuel costs erode margins across transport, manufacturing, and agriculture—the backbone of Uganda's non-oil economy. Manufacturing PMI has already softened due to input cost inflation. A prolonged fuel price crisis risks triggering secondary inflation and slowing FDI in labour-intensive sectors.

## How Could This Dispute Be Resolved?

The most viable path forward involves transparent government arbitration between UPA, oil marketers, and independent auditors to review wholesale costs and retail margins. International best practice—seen in Nigeria and Kenya—uses formula-based pricing that ties retail margins to transparent cost benchmarks, removing the perception of discretionary mark-ups. Uganda could also accelerate import diversification by enabling direct crude imports from other suppliers and streamlining port infrastructure.

---

##