A litre of petrol can cost markedly different amounts on either side of an East African border, even though all three countries depend heavily on imported fuel.
In late September, a litre of petrol in Uganda was trading at about Shs6,874.50, equivalent to roughly $1.73 at the prevailing exchange rate. In Nairobi, Kenya’s maximum retail price was KSh214.03, or about $1.65 a litre. In Dar es Salaam, Tanzania, the September maximum retail price set by the Energy and Water Utilities Regulatory Authority (EWURA) was TSh3,796, equivalent to about $1.43.
The comparison needs an important qualification. Kenya’s figure is an official maximum price for Nairobi, Tanzania’s is a regulatory ceiling for Dar es Salaam, while Uganda’s figure is a market price rather than a national government-set ceiling. Kenya and Tanzania also publish different prices for different locations.
Even with those differences, the gap raises a bigger question for Uganda: why does fuel remain relatively expensive when the country has taken greater control of its petroleum imports?
The answer is not one cost. It begins with the fact that Uganda is a landlocked fuel market. The country imports about 95 percent of its petroleum products through Kenya, amounting to nearly 2.96 billion litres a year, with demand of about 240 million litres a month and growing by roughly 7 percent annually. Much of that fuel enters through the Port of Mombasa and moves through the Kenya Pipeline system before reaching Uganda.
That logistics chain matters because the international price of refined fuel is only the beginning of what a Ugandan motorist eventually pays.
The cost of the product itself is followed by shipping, insurance, port and pipeline charges, inland transport, storage, financing, taxes and retail costs. Exchange-rate movements then determine how much of the dollar-denominated import bill has to be paid in shillings.
Uganda’s currency has recently added pressure. On October 1, the shilling had weakened to about Shs3,965–3,975 against the dollar, from around Shs3,925–3,935 a week earlier, according to Reuters. The depreciation was partly linked to strong dollar demand from importers, particularly in the energy sector. Kenya’s shilling, by contrast, was trading around KSh129.45–129.65 to the dollar.
For a country importing most of its fuel, that difference matters. A weaker shilling raises the local-currency cost of purchasing the same dollar-priced product.
But the international market itself has also been expensive.
Uganda’s Ministry of Finance reported that petrol averaged Shs6,529 a litre and diesel Shs6,647 in August 2026, compared with Shs5,099 and Shs4,733 respectively a year earlier. It attributed the elevated prices partly to geopolitical tensions disrupting global fuel supply chains and to a lag in passing lower international prices through to consumers because some suppliers were still holding stocks purchased at higher prices.
That last point is important because the pump price does not necessarily respond immediately to movements in crude oil.
Petroleum products are bought and shipped ahead of their arrival at the pump. Industry players have previously explained that refined-product prices, transportation costs, shipping times and the price at which stocks were acquired can all influence the eventual retail price. Anthony Ogalo, general manager of the Sustainable Energies and Petroleum Association of Uganda, has also argued that taxes add significantly to the cost structure facing the downstream petroleum industry.
Tax has become an even more important part of the calculation this year.
Uganda’s Excise Duty (Amendment) Act, 2026 increased the duty on petrol from Shs1,550 to Shs1,750 per litre and on diesel from Shs1,230 to Shs1,430. The amendments took effect from July 1, 2026.
That Shs200 increase does not explain the entire difference between Uganda and its neighbours. It does, however, demonstrate how fiscal policy can feed directly into the price motorists see at the pump.
The bigger change in Uganda’s fuel market has been the role of the Uganda National Oil Company.
UNOC is now the sole importer of bulk petroleum products destined for the Ugandan market. The policy was intended to give Uganda greater control over procurement and remove layers of intermediaries from the supply chain. UNOC has also sought to strengthen its position along the Kenyan corridor, including through a 20.15 percent strategic shareholding in Kenya Pipeline Company.
But controlling procurement does not remove the physical cost of moving fuel into a landlocked country.
Uganda can negotiate how it buys fuel, but it still has to pay for bringing that fuel from international markets, moving it through a port and pipeline system, storing it and distributing it across the country.
UNOC itself has acknowledged how sensitive pump prices are to logistics. In June 2025, the company said temporary delivery difficulties along the Kenyan route had contributed to higher retail prices in some areas. It also said supplies brought through Tanzania were more expensive because of the longer transit distance and associated transport costs.
This is where Tanzania provides an interesting comparison.
Tanzania operates a monthly petroleum price-cap system through EWURA. The regulator calculates maximum retail prices for different areas, while retailers are allowed to sell below those ceilings. In September, Dar es Salaam’s petrol cap was TSh3,796 a litre, down TSh102 from August. EWURA says its pricing system takes account of costs associated with fuel delivered through Dar es Salaam, Tanga and Mtwara and publishes caps for individual pricing areas.
Kenya has a similarly regulated retail framework. For September 15 to October 14, EPRA set Nairobi’s maximum petrol price at KSh214.03 a litre, compared with KSh210.87 in Mombasa. Diesel was capped at KSh217.86 in Nairobi and KSh214.58 in Mombasa.
Those systems make regional price comparisons easier to interpret because the regulator publishes a ceiling.
Uganda is different. Its downstream market does not operate under an equivalent monthly national pump-price ceiling. Retail companies can therefore have different prices depending on their costs, location, supply arrangements and competitive decisions. That means a motorist in Kampala may pay a different price from one in Mbarara, Gulu or a station along a major transport corridor.
This also explains why it would be misleading to attribute Uganda’s higher price to a single factor such as taxation.
The three countries are dealing with different combinations of taxes, exchange rates, procurement systems, infrastructure and geography.
Tanzania has access to several seaports and a regulatory price-cap system. Kenya has direct access to Mombasa and regulates maximum retail prices by location. Uganda has to move most of its imported fuel through a neighbouring country before it reaches the domestic market.
And Uganda’s fuel bill is not static.
The Ministry of Finance recorded petrol inflation of 30.9 percent in the year to September 2026 and diesel inflation of 42.5 percent, showing how strongly fuel prices have been feeding into the wider cost of living.
The policy challenge, therefore, is not simply to find a cheaper supplier. Uganda has already changed who controls bulk fuel imports. The next question is whether that control can eventually lower the structural cost of supplying the country.
That could come from better procurement, stronger storage capacity, more efficient use of the Kenyan pipeline, greater competition in downstream distribution and alternative supply corridors.
Infrastructure will be particularly important. UNOC’s downstream mandate includes developing storage terminals and strategic fuel reserves, while Uganda continues to depend heavily on the Kenyan supply corridor. The country’s investment in Kenya Pipeline Company is partly aimed at strengthening that relationship rather than reducing dependence on the corridor altogether.
Uganda has also considered alternative routes through Tanzania. Industry representatives have previously argued that a direct pipeline connection could reduce some of the costs associated with trucking fuel from the Kenyan corridor into Uganda, although the economics depend heavily on the volumes carried and the infrastructure available.
There is, however, a limit to how much government can reduce the pump price without giving up revenue.
Fuel taxes are an important source of public revenue. Cutting the Shs200 excise increase could make petrol cheaper, but government would then have to find the lost revenue elsewhere.
That leaves Uganda facing a more complicated question than why petrol is cheaper in Tanzania or slightly cheaper in Kenya.
The price at the pump is the final product of decisions made much earlier: where the fuel is sourced, the international price when it is purchased, the exchange rate, the route it takes, the cost of storage and transport, the taxes imposed on it and the margin required to sell it.
Uganda has taken a major step by putting UNOC at the centre of petroleum imports. But greater control over procurement is not the same thing as a lower cost of supply.
For motorists, that distinction is becoming increasingly important. The real test of Uganda’s new fuel-import model will not be whether UNOC can bring the product into the country. It will be whether, over time, the country can use that control, together with better infrastructure and supply-chain efficiency, to bring down the cost of getting a litre of fuel from an overseas refinery to a Ugandan filling station.
