As the price of oil plummeted globally, the domino effect has been showing on the price of other commodities. Recently, according to Understanding the Plunges of Oil Prices, a report by the World Bank released in January, 2015, it has been emphasized that the current decline in the price of oil will definitely cause a decrease in prices in agricultural produce, gas, fertilizers and the transportation sector.
But how does this translate into the Ethiopian economic sphere, specifically for transportation? As a trend, one can observe that there have been price modifications on transport tariffs as the price of gasoline has gone down. As a procedure, the recommendation will be given by the Ministry of Trade (MoT), including information about the price of different kinds of gasoline and how much changes have been shown on their respective prices; the recommendation will then be given to the Federal Transport Authority (FTA).
FTA, the body responsible for administering and regulating all activities related to transportation will make the calculation and adjust the price. According to the document from the FTA, the price will be adjusted based on three elements – the distance to the location [origin to destination], the price difference on the price of gasoline from the previous period and the number of passengers. Then, as per the adjustment, it would be disclosed to the public and the enforcement part will be left to transport bureaus at the federal level and regional state level.
Transport bureaus, be it at regional level or districts, as one of enforcing bodies, will be the ones that implement such adjustments. For instance, the Addis Abeba Transport Bureau has the responsibility of dealing with the issue and under it, 10 districts have their own respective offices.
Unlike in the previous times when the FTA has adjusted the price tariff for transport at one month intervals, the current scenario brings something new, which is the price was readjusted twice within a month’s time. One was made on January 9, 2015 and then readjusted on January 31, 2015.
“This was caused by the current reduction on the price of gas at the global level,” said Kebede Chane, the transport minister, during the ministry’s six-month performance report to the house of people’s representatives on January 29, 2015.
According to marketwatch.com, the price of crude oil has declined from 80 dollars per barrel, as of November, 2014, to 51.43 dollars per barrel, as of February 6, 2015.
The price of diesel and benzene have declined; the price of diesel, which was 19.00 Br per litre as of September, 2014, went down to 18.09 Br per litre on November and then to 17.49 Br litre on December 2014. Benzene has also shown a decrease in its own right going from 20.47 Br per litre as of September 2014, to 19.95 Br per litre in November and then to 19.41 Br in December 2014.
Following this, the FTA adjusted the transport tariff in December; as per the decline, the price of transportation for traveling up to 2.5Km became 1.40 Br, for 2.6Km to 7Km -2.70 Br, for 7.1Km to 10Km – 3.85 Br, 10.1Km to 12Km-3.90Br and 12.1Km to 15Km-five Birr. The aforementioned prices were set for city minibuses. Moreover, the tariff for the Higer Bus was adjusted in various categories starting from up to eight kilo meters, to 8.1Km to 12Km, 12.1Km to 15Km, 15.1Km to 18Km and 18.1Km to 21Km, with respective fares of 2.05Br, 3.25 Br, 3.95 Br, 4.40 Br, and 5.05 Br.
Once again, having considered another reduction on the price of crude oil, following the late December adjustment, the authority announced new adjustments to the price ranges. Accordingly, the aforementioned lengths for minibuses were made to be 1.35Br, 2.50Br, 3.60Br, 3.65Br, 4.60Br. The Higer buses saw respective price reductions of 10 cents, 15 cents, 15 cents 20 cents and 25 cents.
According to an anonymous source at the FTA, despite such adjustments, passengers claim that they are not beneficiary of this price reduction, as there is either lack of updated information on the side of the general public about each respective adjustments or gaps in the process of enforcement.
As per the Directive number two/2011, anyone who forces passengers to pay beyond the tariffs shall face 120 Br penalty. Traffic police not only have the authority but the responsibly to penalize as well.
“We just received the letter from the Bureau that include the directive and we will punish those who violate the tariffs if any disappointment comes from passengers,” said Assefa Mezgebu (Sgt.), public relations officer for the Addis Abeba Traffic Police Accident Control and Inspection Department.
“We have always informed the public in case of any new adjustments on tariffs and for this we use brochures and we have a free phone line services [888], which is available from Monday to Friday during business hours and two additional phones lines that are available,” added Genet.
The two additional lines are ordinary phone numbers that are not free of charge, and in fact while using the free line – 888 one has to pass through three steps to reach an AATB operator; the first step takes a person to operators to select between calling either federal or regional offices, the second is to select between calling either ministerial or non- ministerial offices and the last is to select offices under Addis Abeba City Administration in order to report complaint against offenders. The Bureau has only two operators.
“If any passengers bring their dissatisfaction to our attention, we will directly punish those who charge them above tariff without going through time-consuming procedures such as asking for evidence or witnesses,” noted Genet.
Tigist Ayele, a mother of two seems clueless about either the free lines or the procedures of accusing those who charge above the tariff, and is not even sure about who to approach in defending her rights. Fortune approached her while she was waiting to take a taxi to her home at one of the new taxi terminals established by the Bureau on November, 2014 around Piazza, near Arada building. She was heading from Kality to Asko and then to Burayu.
“This is a route that I used for the past four years where I travel from work to home,” she said.
She works at a government company, in the outskirts of Addis Abeba around Kality at a salary of 2,200 Br a month. Unlike many, her company had been providing her with transport services for the past four years but as the bus that provides the service does not reach her door, she opted to travel the rest by spending extra money.
“Despite both adjustments having been made on December and January and though I had heard of the new tariffs from people discussing it, I paid three Birr for one way travel and I still pay the same amount,” said Tigist. “ I prefer to pay what they charge me because I think it would be time consuming and troublesome to argue with each redat or driver on the issue or I am not sure who to approach,” added Tigist. Though Genet said that the procedures of punishing violators are simple, Tigist is unaware of this fact.
Taxi terminal supervisors such as Girma Wondeme, who was busy supervising taxies at the same taxi terminal that Tigist was standing as Fortune met with him during the rush hour of February 5, 2015, only has a mandate to inform people about the tariffs if any choose to inquire.
“I only tell people but have no right to punish anyone in case of any violation,” said Girma.
Similar to Tigist is the case of Freziare Bekele, a first year Public Administration student at Addis Abeba University. She lives at CMC, eastern side of Addis Abeba and she uses two taxies to get from home to the University and the same to get back: one from Sidist Kilo to Megenagna and from Megenagna to CMC, which costs her 12 Br a day. But according to the tariffs, she loses two Birr every day. The only difference here being that unlike Tigist, she is not aware about the new price adjustments.
In spite of the reality, or perhaps because of it, AATB, as an enforcing body is content pointing its finger emphasizing that “the general public lacks commitment to challenge drivers of public transport or their assistants (redat) when they are forced to pay above the tariff”, states Genet Dibaba, communications officer at AATB.
But she admits that enough work has not been done in creating awareness about the means of penalizing and punishing those who charge above tariffs.
Fortune asked whether the Bureau will work on posting the tariffs at every taxi and bus stations as well as the aforementioned phone lines. She simply replied that the Bureau will consider it.
It has been a week since the adjustment of the prices, and the Bureau plans to hold a discussion with taxi and Higer bus owners associations on the implementation of the new tariff. The Bureau has administered 10 minibus associations and three higer bus associations under it. And according to the data from the Bureau there are 11,119 buses above 11 seats and 23,335 buses with less than 12 seats.
“We are ready to work with the new tariffs but there is dissatisfaction from the owners of the vehicles about the price set by FTA and this may affect the extent of the implementation of the tariffs,” Zerihune Desalegne, chairman of Zebra Minibuses association told Fortune.
This association alone operates 500 buses with less than 12 seats .
The tariff adjustment only considers the price increment in the price of gas while the increase in the price of spare parts and lubricants used for vehicles are neglected, add Zerihun.
A source close to the case of price adjustment by FTA, on condition of anonymity affirmed the above fact stating that price arrangement will be made based on the price fluctuation on gas, nothing more and this becomes a source of frustration for taxi associations and owners.
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