The Monitor (Kampala)

allafrica.com February 21, 2003 Posted to the web February 24, 2003 Charles Odoi Kampala

The price for petroleum hit the Shs 1,700 mark yesterday when oil companies raised the pump prices by Shs 70.

Diesel rose from Shs 1,380 to Shs1,450 and Kerosene was raised by Shs 50 from Shs 1,230.

This is the third time since the beginning of the year that fuel prices are rising.

Yesterday's price hike was attributed to the sharp increase of crude oil prices as the possibility of a US led attack on Iraq looms.

Oil strikes in Venezuela and Nigeria are also to blame.

Brent Crude Oil prices now stand at $32 a barrel just below a two year high it had reached of $33.10 last week.

"The price change came as a result of the rise in crude oil acquisition price on the World market which has risen by over 15% since January," Caltex Brand and Marketing Manager Edwin Kugonza said in a press release.

The statement said that Caltex increased the pump prices by 4% and will absorb the biggest portion of the 15% rise in crude oil prices.

In an interview yesterday, Total Managing Director Leopold Tzeuton said the value of the shilling to the dollar also played a big role.

"The increasing price of crude oil on the international market due to certain world events and the persistent increase in the foreign exchange rates have a big impact on fuel prices here," Mr. Tzeuton said.

"We are directly affected by the world market. We merely follow it and do not control it," he added.

Mr Tzeuton admitted the price hike could affect consumption but said that Total takes into consideration the purchasing power of ordinary Ugandans before making decisions.

"Total controls the way it increases prices. If we followed the market blindly, fuel prices would be much higher," he said.

But officials from the three major fuel companies; Shell, Total and Caltex said the oil shortage the Mombasa oil refinery faced early in the year and the break down of the Kisumu-Eldoret pipeline last month have nothing to do with yesterday's increase.

"Certainly not," Shell's Public Relations Officer Fred Massadde said.