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High prices: How realistic are Museveni solutions?

• Electric cars are too pricey, cost between $30,000 (Shs 117 million) and $40,000 (Shs 156 million)

• There are only two functional railway lines; Kampala–Malaba and Kampala-Port Bell

Sky-high fuel prices continue to bite and have pushed higher the already high prices for commodities. This undeniable reality of the high cost of urban living has forced many people in the capital to beg for government intervention and a lot more have cut back on consumption.

Many have parked their cars, creating more legroom for maneuvering on Kampala’s mainly narrow and bumpy roads. But President Museveni in his address to the nation last Friday said the real problem is the pricey fuel and for the nation to worm its way around it, we need to dump combustion engine cars.

Ugandans, he said, should buy electric cars and motorcycles. The president ordered all government agencies to buy locally assembled electric vehicles and use railway transport. But how realistic is that solution?

Since January, Uganda and the rest of the world have suffered the harshest brunt of a steady rise in the price of essential commodities. The soaring prices are linked to the raging war between Russia and Ukraine and the hiking prices of fuel.

Several countries including Kenya and Tanzania have since intervened with subsidies on fuel to help their nationals survive. According to the August 1, 2022 data published by the Global Petrol Prices, Uganda has the highest price of fuel after Burundi in the East African region.

The site shows that the price of fuel in Uganda is about Shs 6,280 (petrol) and Shs 5,980 (diesel), compared to Shs 4,984 (petrol) and Shs 4,364 (diesel) in Kenya. It costs Shs 5,709 (petrol) and Shs 5561 (diesel) in Tanzania, Shs 5,538 (petrol) and Shs 5,697 (diesel) in Rwanda and Shs 6,212 (petrol) and 6,594 (diesel) in Burundi.

In the world’s largest economy, the United States, the average price for a gallon of fuel is $4.80 (Shs 18,000) which makes it about Shs 4,736 a litre, seeing as a gallon is made up of 3.8 litres, according to Mark Kidamba, an independent financial/ investment analyst.

He said that currently, a litre of petrol in Uganda goes for Shs 6,280 ($1.65) implying that on average Ugandans are paying north of $6 for a gallon of fuel. A litre of petrol has since climbed to Shs 6,620.

The data released by the Uganda Bureau of Statistics (UBOS) shows that inflation in July climbed to 7.9 per cent up from the 6.8 per cent, registered in June 2022. The inflation was driven by the increase in prices of commodities under the core inflation, which increased to 6.3 per cent in July 2022, up from 5.5 per cent registered in June 2022.

The increase in the core inflation is linked to the annual other goods inflation, which increased to 10.2 per cent from 9.3 per cent. Between July 2021 and July 2022, the prices of maize flour increased from Shs 1,957 to Shs 3,343, diesel from Shs 3,531 to 6,096, petrol from Shs 4,020 to Shs 6,267, and rice from Shs 3,661 to Shs 4,363 per kilogramme among other commodities.

Speaking last Friday, President Yoweri Museveni said the answer to the high inflation and fuel prices is to shift from petroleum cars to electric vehicles, motorcycles, and the train. He said other solutions are diplomacy and being frugal. Museveni ordered all government agencies to buy electric buses from local manufacturers including Kiira Motors.

“That means there will be no more importation of those vehicles. That way, we shall be able to avoid imported inflation and problems,” he said.

“The real problem is the fuel and the answer for it is to go for electric vehicles and electric motorcycles and secondly to use the railway where the railway can be quickly...Even though the railway is not electric and it still uses diesel, it is much cheaper and carries more people and goods,” he said.

“When we had this big problem of rising commodity prices, the debate was that we subsidize the petrol from outside and remove taxes. That one, we say no. We say this is not wise. If we wanted, we could talk to Russia and ask them to sell us subsidized fuel but that would put us at collision with the Americans. For now, I don’t think that is necessary. For now, let us economize the fuel as we get other solutions.”

“We are lucky that we had already discovered our petrol which will come out by 2025. For us, we are going to enjoy that money because other people are no longer looking for petrol, they will have moved to electric cars. The prices would have gone up then for the little petroleum that is available now and we will benefit from that.”

HOW VIABLE IS RAILWAYS TRANSPORT?

Established after the collapse of the East African Community (EAC) in 1977, Uganda Railways Corporation (URC) has a total track length network of 1,266km and 4,050.711 hectares of land in various parts of the country. The land and properties are situated along the railway line; Kampala–Malaba line, Port Bell Line, Kampala-Kasese Line, Busoga Loop Line, Kampala-Mukono Line and Tororo-Pakwach line.

Interviewed for this story, John Linonn, the URC spokesperson, said of all the railway lines, it’s only Kampala–Malaba and Kampala-Port Bell, which are functional.

“Kampala–Malaba is functional but it’s only carrying cargo while Port Bell line is carrying passengers at a fair price of between Shs 1,000 and Shs 2,000,” he said.

“For non-functional lines, we are going to make a few adjustments; for example, from Kampala to Mukono, Port Bell, and Kyengera line, we are going to replace steel sleeper rail with concrete sleepers,” he said adding, “The rehabilitation of other lines like Kasese will commence soon to tackle the issue of increasing prices of fuel...”

John Linonn didn’t put a clock to the repairs. That means that solution is not available right now. The country should have an elaborate infrastructure, such as assembly areas for passengers for railway transport to work. Right now the only available assembly place for railway passengers is adjacent to Eso Corner on Jinja road. The train makes stopovers at Nakawa, Kireka, Makerere Business School (Mubs), and Bweyogerere and then proceeds to Namanve station.

According to the latest COSASE report, URC purchased four locomotives in August 2021 at a cost of Shs 48 billion. They are parked in the workshop. The URC Workers Union revealed that the new locomotives are too long and cannot turn on the rail tracks.

“The Uganda railway line of 50 to 80 pounds would not be able to handle the weight of the new locomotives, which required that it runs on a 90-pound railway line. The motors, which propel the locomotives are very low and they are non-operational on Uganda rail lines,” the report found.

The report showed that through dubious and fraudulent activities, several pieces of the corporation’s land have been encroached on throughout the entire network, especially in the urban areas of Kampala and Jinja.

ELECTRIC CARS

Electric cars are more expensive than combustion engine cars. They cost between $30,000 (Shs 117 million) and $40,000 (Shs 156 million). Electric cars, however, are cheaper to run than gas-powered cars. On average, it costs $300 (Shs 1.1million) to $400 (Shs 1.5 million) per year to charge an electric vehicle, depending on when and where you charge it.

A typical plug-in hybrid costs about $700 (Shs 2.7 million) per year. A gasoline car costs about $1,000 (Shs 3.9 million) to $2,500 (Shs 9.7 million) a year to fill up. Electric cars are also a lot cheaper to maintain and service because they have fewer moving parts and don’t need oil changes.

Recently, Uganda launched its bid to manufacture electric and hybrid cars. Electric cars, according to a source at Kiira Motors, are more expensive compared to the combustion engine cars on the market. The Kiira EVS, a four-seater and cheapest car which runs both on rechargeable batteries and a combustion system, goes for between $25,000 (Shs 97.5m) and $35,000 (Shs 136 million) without taxes.

Due to the increasing poverty levels in the country, only a handful of Ugandans can afford electric cars compared to combustion engine cars which go for as low as Shs 15 million. According to the 2019/2020 Uganda National Household Survey, about 12.3 million of the 40 million Ugandans excluding over 15 million children live below the poverty line of US$1.77 (Shs 6,630).

“There is no standard price for locally assembled electric cars in Uganda. A customer comes, engages the manufacturer, which is Kiira motors, gives the specifics of the car he/she wants, and then they [Kiira motors] tell him the cost,” a source who declined to be named said.

Kiira Motors manufactured and delivered five Kayoola buses to Tondeka Metro Bus Service. The source, however, declined to reveal the cost of each bus. The source said Kayoola EV has a range of 300 kilometres on a single charge. A recharge takes about one and half hours.

“The company has its chargers but the issue of charging was left to the government. The ministry of Works and the ministry of Energy are trying to put in place what is called a charging infrastructure for electric vehicles in Uganda, Kenya, and Rwanda. Individuals can buy chargers and charge from their homes,” he said.

Currently, there are three charging stations in the country; two in Nakasongola and one in an unrevealed area in Kampala. Despite being the future of the transport sector, the introduction of electric cars has been criticized by many Ugandans who claim that only 19 per cent of Ugandans are connected to the national grid.

Currently, there are two types of chargers; the high-voltage and low-voltage. The source said the cost of charging cars will be determined by the cost of a unit of electricity. Individuals can buy low-voltage chargers and install them in their homes; however, they take more hours to fully charge a car.

REACTION TO MUSEVENI’S SPEECH

Commenting on President Yoweri Museveni’s speech, the deputy presidential press secretary Faruk Kirunda said those criticizing the head of state’s speeches and his fail- ure to offer viable solutions to the increasing prices of commodities should put themselves in Museveni’s shoes as a visionary.

“Those criticizing the president for his outlook on economic issues should put themselves in his shoes as a visionary. Kaguta Museveni looks at long-term and permanent solutions rather than temporary, unsustainable ones in an unpredictable global economy,” Kirunda said shortly after Museveni’s televised address.

Rebecca Kadaga, the first deputy prime minister of Uganda and minister of East African Community Affairs, said the old railway network should include the “Busoga Loop line “ that ran from Jinja into the hinterland of North Busoga and was an economic lifeline for the farmers and covered several districts.

Lawyer Sarah Bireete said; “That time when leaders run out of options: 19% of Ugandans are connected to the national grid and we have no railway system - and the ruler is telling citizens to either buy electric cars or use the train; as a way of mitigating the high cost of living.”

Jane Nalunga, the executive director of SEATINI, a non-governmental organization, which promotes development trade, fiscal and related policies for sustained development in Uganda, said, “We need to know our competitive and comparative advantage as a country. We need to be clear on the ways of reducing unemployment and contributing to national development. We should analyze whether it is cheaper for Uganda to manufacture cars or to import them. Uganda should adopt the Kenya way.

Kenya has promoted avocado exportation and they are now reaping from the commitment toward avocado. They are now the leading exporter of avocadoes in Africa and the sixth in the world. The president should guide the nation in a direction where we are competitive instead of being all over the place. Can we sit back and agree on what leading export Uganda shall be known for?”

“The revamping of the train is a good idea because you cannot be a landlocked country without an alternative transport system. Away from the roads, our marine transport especially on Lake Victoria, and the train should have been developed a while back. The president has been recommending frugality yet his government is not frugal. The costs of administration remain very high yet people are dying of hunger. It is not the first time that people in Uganda are dying of hunger. As people die, there’s hardly any concern to chart a way forward”.

Interviewed for this article, a car dealer in Mengo said, “Right now, we look for and sell cars which consume less fuel because there are no charging ports in the country. We are insisting that we get fuel-efficient vehicles for our customers before the introduction of electric and hybrid cars.”

“Within three to four years, electric cars will flood our bonds. We had green electric motorcycles but the business failed because there were no charging points. So, let the government first work on that issue. Ugandans adapt so easily. I remember when we were switching from manual to automatic cars, Ugandans adjusted, and eventually, everyone got an automatic car. Ugandans will buy electric cars provided the cost is low,” he said.

“The only problem now is the availability of electric cars. We shall first have hybrid cars. Don’t expect electric cars at the beginning of this transformation. Hybrid cars (use fuel and batteries) are available for as low as Shs 50 million,” he said.

© 2016 Observer Media Ltd