Matatu Owners Association sees higher fares despite lower fuel prices
What you need to know:
- The association maintains that other factors that determine the cost of running a vehicle have either remained constant or increased during the year.
- Diesel is currently retailing at Sh90.85, a decrease of Sh3.67 from last month.
Commuters should not expect a decline in fares, despite a five-month back-to-back reduction in fuel prices that has so far seen an overall drop in inflation.
The Matatu Owners Association (MOA) said commuters should not peg the cost of commuting to a reduction in fuel prices or inflation.
Instead, the lobby group says Kenyans should brace themselves for a slight increase as demand outstrips supply during the festive season.
The group’s announcement comes amid a temporary fuel shortage experienced at some petrol stations on Monday and Tuesday as motorists rushed to take advantage of the new fuel prices.
While it agrees that the cost of fuel has dropped by a considerable margin, MOA maintains that other factors that determine the cost of running a public service vehicle have either remained constant or increased during the year.
SUPPLY AND DEMAND
“The transport industry is regulated by supply and demand,” said Albert Karakacha, MOA's national coordinator.
“While people can complain we have raised our fares, in (the) real sense we haven’t. It is interest rates, maintenance costs, taxes, traffic jams and the number of commuters that have increased,” he argued.
Under the new pricing guidelines issued on Sunday by the Energy Regulatory Commission, diesel, which is used by most public service vehicles (PSVs), is currently retailing at Sh90.85, a decrease of Sh3.67 from last month. The current price is also Sh13 lower than it was in July, when it was retailing at Sh104.67.
The price of crude oil has dropped considerably on world markets, with prices falling to their lowest levels since 2009, resulting in a reduction in fuel prices locally.
NOT INTENTIONAL
Mr Karakacha said the habit of public service operators not reducing fares when pump prices go down is not intentional.
“We still ferry people for as low as Sh10, just like it was in 1995, when it’s not rush hour, so the increase in cost during rush hour is absolutely necessary,” he said, admitting that while the association should regularise fares, this is not always within their control.
“Fare prices are set by saccos, but sometimes imprudent matatu crew can overcharge passengers for their own benefit since the payments are not receipted.
“Once the cashless system catches up, even the saccos themselves will have more control in fares,” he said, adding that this would contribute to fair pricing.
Maintaining high fares is likely to raise the cost of living for many Kenyans.
INFLATION DOWN
Data from the Kenya National Bureau of Statistics (KNBS) shows that inflation for the month of November stood at 6.09 per cent, down from 8.36 per cent in August, when it hit a 25-month high.
As a result, lower prices for electricity, fuel and food — sugar, milk, sifted maize flour and potatoes — have been witnessed countrywide.
Because of this, the Consumers Federation of Kenya (Cofek) says it is unfair that PSV owners are failing to pass on this benefit to commuters.
“The cost of fuel constitutes 40 to 50 per cent of the cost of running a vehicle, so when it goes down by about 10 percent the cost of commuting should also go down,” said Cofek Secretary-General Stephen Mutoro, adding that a solution would be to introduce tougher regulation.
'GOVERNMENT UNTO THEMSELVES'
“Matatus… are a government unto themselves and make decisions on their own. For example, when it rains, the fare increases by up to 300 per cent, which doesn’t happen anywhere in the world,” he said.
“The ERC should also lengthen the periods they take to introduce new prices for fuel so that it gives the transport industry enough time to adjust because it would be worthless to reduce fares this month and then increase them next month.”
He also proposed the introduction of a body that would regulate the fares charged by PSVs, just like the ERC regulates the price of fuel, a move the MOA strongly opposes.
“Regularisation of fares could create a situation where a large company could monopolise the whole industry as there will be no competition,” argued Mr Karakacha.
