Transport Operators In Tight Spot As Fuel Prices Bite Top story

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In short
Public transport operators find themselves in a tricky position as new taxes and the depreciating shilling push fuel prices up.

Public transport operators find themselves in a tricky position as both new taxes and the depreciating shilling push fuel prices up.
 
Fuel prices have been going up this month as new taxes for this financial year came into force. During the budget speech last month, finance minister Matiya Kasaija introduced a plethora of taxes including excise duty of 1000 shillings and 680 shillings on a litre of petrol and diesel respectively.
 
The new taxes, coupled with the depreciating shilling, are pushing transport operators onto the wall with many saying they have few options. In the last one week, a litre of petrol has jumped from 3,400 to between 3,600 and 3,850 shillings. Diesel is not going for between 3,050 and 3,300 shillings per litre.
 
The Uganda Shilling has meanwhile also been experiencing a free-fall against the US dollar, declining from 3,300 to 3,800 shillings in just two weeks.
 
Now transport operators find themselves in a tight spot with fears that any slight hike in fares could drive away passengers.
 
Karyang Akam Lokong, Secretary Kisenyi Bus Terminal Operators, describes the season as off-peak with few passengers and therefore not advisable to increase bus fares. He says around this time few people make trips upcountry and back to the city.  
 
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Lokong says they are still monitoring the situation since the transport sector affects other sectors. He says they also have to consider other contributing factors.
 
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Some taxi operators are also undecided on whether to hike the fares. Joseph Mugambwa, the secretary at the  Kisenyi  Taxi park, refers to it as a service where they transport low-income earners. He says this puts taxi operators at a disadvantage when they rush to increase the fares.
 
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But it's a different story with some traders saying transport operators have started increasing fares. Geoffrey Musisi who deals sells Irish potato in Owino Market says costs of transport from Masaka and other places has steadily been increasing since the beginning of July.
 
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Early this week, Bank of Uganda Governor, Emmanuel Tumusiime-Mutebile, told members of the Uganda Manufacturers' Association that the central bank has given up on the shilling. He said it was nolonger sustainable for the Bank of Uganda to try and prop up the exchange rate, at levels which are not consistent with supply and demand in the foreign exchange market.
 
Later in the week, the central bank intervened in the market in a move the bank said was intended to remove the spikes in the movement of the Shilling against the U.S. dollar.