Amidst the galloping fuel prices, Uganda President Museveni took to national TV on Wednesday to push for electric cars and railways as a long term solution to crude oil supply shocks.
“This is the answer. The correct way is to start moving away from petrol to electric cars and we have already started,” President Museveni said, rejecting fuel subsidies that are suggested in some quarters to lower costs.
Diesel in Kampala is going for over Ush6,500 ($1.72) a litre, while petrol is about Ush7,000 ($1.85).
Earlier on the same day, Dr Joseph Muvawala, the executive director of the National Planning Authority (NPA), mooted a plan for direct importation of crude oil from the producing countries as a short term measure, a development that would eliminate Kenyan oil marketers that hold contracts to buy petroleum product for refining and supply to the wider Eastern Africa. This, he argued, would result in prices at the pump dropping by 15 to 20 percent.
“At NPA we are already thinking,” he said. “If we imported our own crude, refined in Mombasa, it would lower the price of fuel,” Dr Muvawala said.
However, industry players say eliminating companies that control oil imports and obtaining slots to refine crude at the Mombasa refinery is a complex process for landlocked Uganda to navigate in the short term.
Industry data shows that most small oil marketing companies in Uganda source 100 percent of their product from Kenya, but overall, Uganda’s petroleum products industry gets over 90 percent of imports from Kenya while the balance is sourced from Tanzania.
The market in Uganda is liberalised, but economists are urging for consumer protection to contain unregulated fuel margins by oil marketers.
The country’s other undoing is the lack of reserves for refined products. The capacity of the existing fuel reserves at 30 million litres, enough to last the country only 4.5 days, is not sufficient to cushion the economy against unforeseen regional and global supply shocks, Ministry of Energy data shows.
President Museveni sees the solution in the locally made fully electric car Kiira EV and the passenger service bus Kayoola EV.
“This pressure is to spend the little money we have on problems. We would rather use it to get out of problems permanently. The long term solution is the electric car and trains,” he said.
“Electric vehicles are cleaner; don’t have pollution, are cheaper and [have] less maintenance costs.”