Ugandans told to cut travel as fuel prices soar

Ugandans are being urged to cut unnecessary journeys and use public transport as rising fuel prices threaten to make food, transport and other essential goods more expensive.

Petrol is selling at about Shs 6,800 a litre, while diesel costs approximately Shs 7,000, according to Deputy Secretary to the Treasury Patrick Ocailap. The warning comes as the government releases Shs 21 trillion for the second quarter of the 2026/27 financial year, with Shs 10 trillion earmarked for debt repayments.

For households already struggling to balance their budgets, the combination presents a difficult prospect: higher everyday expenses at a time when a substantial share of government funds is committed to paying debts incurred in previous years.

Speaking during the release of the funds, Ocailap attributed the fuel price increases mainly to developments in international markets and pressure on the exchange rate. He said global oil prices had risen from about $59 to $104 a barrel since the outbreak of the war he referenced.

Because Uganda imports fuel, higher international prices increase the amount importers must pay. When demand for dollars rises or the shilling weakens, those imports can become even more expensive.

The consequences extend beyond motorists. Higher fuel costs can increase transport expenses for traders moving food to markets, businesses delivering goods and commuters travelling to work.

Ocailap rejected suggestions that domestic taxes were primarily responsible for the increase. He said the tax on petrol stood at Shs 1,750 per litre, following a Shs 200 increase in the current financial year, while diesel attracted Shs 1,430 per litre.

“Every litre of your petrol, I am taking only Shs 1,750. What is the pump price? Shs 6,800,” he said.

On the figures he provided, petrol tax accounts for roughly 26 per cent of the pump price. The remaining amount reflects other costs, including fuel purchases, transport, distribution and exchange-rate effects.

The government argues that fuel taxes help finance public programmes, including the Parish Development Model (PDM), which provides funds to support household income-generating activities.

Ocailap also dismissed claims that foreign exchange pressures were linked to the proposed Sovereignty Bill.

“I have seen that argument in the media, but from where we sit, we have not seen evidence that the sovereignty bill has reduced foreign exchange supply. The need to buy fuel, whose prices have almost more than doubled worldwide since the advent of the war, is one of the factors,” he said.

He challenged those making the connection to provide evidence. Of the Shs21 trillion released, Shs 10 trillion, approximately 48 per cent, will go towards servicing public debt.

That means nearly half the quarterly allocation is committed to meeting existing financial obligations. The government maintains that the debt remains sustainable because it can meet repayments when they fall due.

Ocailap defended past borrowing, saying it had financed infrastructure such as dams, electricity generation facilities, roads and expressways. He cited the Kampala Expressway, which he said generates between Shs 5 billion and Shs 6 billion monthly.

The Treasury official said the quarterly releases were consistent with the approved budget and borrowing programme. Treasury bills and bonds would continue to be issued according to the published calendar, without additional borrowing outside the planned framework.

**HIGHER INTEREST RATES BRING ANOTHER COST **

The government is also defending the Bank of Uganda’s tighter monetary policy as a response to inflation and exchange-rate pressures.

By making borrowing more expensive and limiting the amount of money circulating in the economy, the central bank aims to reduce pressure on prices and the shilling. But this creates another difficulty for businesses.

Higher lending rates can discourage companies from borrowing to expand production, purchase equipment or finance operations. Arthur Bainomugisha, executive director of the Advocates Coalition for Development and Environment (ACODE), supported the central bank’s intervention.

“The intervention is already making an impact because, without intervening, it would have been as if no one was in control,” he said.

However, he warned that more expensive credit could constrain private investment. The challenge for policymakers is to contain inflation without making it unnecessarily difficult for businesses to grow.

Ocailap said the government was coordinating with the Bank of Uganda and that measures to restrain excess liquidity were beginning to influence the exchange rate.

**FAMILIES TOLD TO ADJUST SPENDING **

For households, Ocailap’s advice was to reconsider spending habits, including how frequently they travel.

“We expect adjustment at a household level. If you have been using five cars in your home, you might have to cut down the number of trips. Alternatively, you can jump into a taxi or another boda boda instead of buying fuel, which is very expensive,” he said.

He also encouraged farmers to use the rains to plant fast-maturing crops, particularly ahead of possible weather-related disruptions, and urged beneficiaries to invest PDM funds productively.

Ocailap said the economy could eventually settle into a new balance as households, businesses and government adjusted to changing conditions.

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