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Transport fares remain high despite fuel price reduction

By BusinessNews Staff on February 26, 2015

One month after the Federal Government reduced the pump price of fuel by over 10 per cent, the reduction has not reflected on the cost of transportation across the country.

Findings by our correspondent on Tuesday showed that road transporters, particularly those delivering interstate transport services, had yet to reduce the cost of their transport fares.

Even as many stuck to the old rate regardless of the slash in the petrol price, a few others had increased their fares marginally.

For instance, at the Jabi/Utako Park, Abuja, where most interstate transporters operate from, it was observed that bus fares before and after the government announced the reduction in fuel price, remained unchanged.

The transport fare from Abuja to Lagos by God is Good Motors as at Tuesday is between N5,050 and N5,200, depending on what part of Lagos the passenger is travelling to.

It was learnt this was the same price that was charged by the transporter some days before January 18, 2015 when the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, announced a reduction in fuel price by N10.

Similarly, the fare from Abuja to Owerri was put at N4,000 by the same transporter, a little above what was charged before the government reduced the price of fuel.

It was also learnt that despite the fact that most of the interstate buses at the park were run on fuel, the managements of the various companies saw no reason in cutting down on the transport fares.

Also, ABC Transport, a major interstate transporter, did not reduce its prices.

Our correspondent observed that the fare from Abuja to Lagos as of Tuesday was N5,900. The same price was charged from Abuja to Owerri by the transporter, an amount that is about N150 higher than what it used to be before the fuel price was reduced.

A senior official of the God is Good Motors, who gave his name simply as Mr. Kingsley, told our correspondent that most interstate transport companies were not likely to reduce fares.

He said, “The reduction in fuel price is a welcome development, but it is so marginal that it can hardly cause a reduction in the cost of transportation. However, owners of interstate transport companies will hardly reduce fares as a result of that cut in fuel price because there are other activities in this business that take a lot of funds.

“For instance, some roads are still bad and vehicles that ply this kind of roads must undergo frequent maintenance service in order to keep them fit. So when you consider this as a manager, you will not think of reducing your fare.”

Commenting on the issue, a renowned economist and Chairman/Chief Executive Officer, Financial Derivatives Company, Mr. Bismark Rewane, said it was unfortunate that the low income earners had yet to benefit from the cut in fuel price as transport fares were still high.

He explained that the immediate beneficiaries were car owners, homes and businesses using petrol for their generators.

Rewane also said the naira depreciation must have also rubbed off the expected reduction in prices of fuel-induced products and services.

He said, “Public transport costs and the costs for transporting goods are still expected to decline. Although benefits may not materialise for another few months, they could positively impact the purchasing power of consumers, especially those in the lower income class (61 per cent of the population).

“But the lower-class households stand to enjoy fewer benefits from the reduction because potential transport cost reduction has yet to materialise.”

A senior officer of the ABC Transport also told out correspondent that the increase in airfares had also warranted the marginal rise in interstate land transport cost.

The official, who pleaded not to be named as she was not authorised to speak on the matter, said, “Our bosses travel by air and they know when airfares rise. They also know that the fall of the naira against the dollar is taking its toll on air tickets.

“So all these factors are what they consider and that is why transporters are still comfortable with what is being charged despite the reduction in fuel price.”

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