Relief for transporters as fuel prices drop

He cheerfully looks up to the fuel pump attendant as he refuels his motorcycle with two litres of petrol before he struggles to get money from his innermost jacket from the three he is wearing.
Drop in fuel prices is likely to ease inflation. The New Times / T. Kisambira.
Drop in fuel prices is likely to ease inflation. The New Times / T. Kisambira.

He cheerfully looks up to the fuel pump attendant as he refuels his motorcycle with two litres of petrol before he struggles to get money from his innermost jacket from the three he is wearing.

After adjusting his helmet to clearly see where he is dipping his hand, he finally pulls out a Rwf2,000 note. The attendant refunds Rwf60 as smiles return to the face of this 36 year old motorcyclist from Remera, a suburb in Kigali city.

Fidele Rwamwanga, like other taxi motor operators used to pay Rwf1,030 for a litre of petrol before government decided to cut the price by Rwf60 on August 1, 2012. Government also slashed diesel prices by Rwf30 to Rwf970 due to the fall in oil prices on the international market over the last two months.

“We are a bit relieved now that fuel prices have gone down,” Rwamwanga says, adding; “I am glad that these days, even on a bad day, I go back home with bread for children.”

Over the last three months, government raised petrol prices to Rwf1,030 from Rwf1,000, citing increasing global prices of crude oil.

Since last year, the local market has witnessed fluctuations in fuel prices. In January 2011, prices rose from Rwf952 to Rwf965 before escalating Rwf1,060 in April of the same year.

In June 2011, government reduced the prices to Rwf1, 025 before further cooling to Rwf940 at the beginning of this year.

Experts say the recent decision by government would boost the country’s bid to ease overall inflationary pressures. Throughout last year, the government managed to keep the inflation rate at single digits as other regional economies grappled with rising commodity prices and weak currencies.

The country’s inflation rate dropped to 5.92 per cent in June this year from 8.32 per cent in May; thanks to the central banks tight monetary policy as well as improved food yields.

“Fuel is an important commodity that influences the prices of goods and services especially through transport costs,” John Rwangombwa, the Minister of Finance and Economic Planning said recently.

Nevertheless, consumers are anxiously waiting on government’s move to direct a reduction in transport costs claiming transporters take advantage of them.

“I am expecting transport costs to go down as usual because transporters have been telling us fuel prices have increased. Now that prices are have gone down, why can’t they (transporters) lower the fares?” Claude Higiro, a hawker complains.

The government through Rwanda Utilities Regulatory Authority (RURA) regulates public transport fares.

Emmanuel Asaba, Head of Transport at RURA says that the reduction in transport costs is possible but there is need understand the impact it would cause to the sector.

“For the moment, we are in the process of calibrating all parameters, get figures before we can take decision,” he told Business Times in a telephone interview.

According to Asaba, besides fuel, there are several ways through which transporters incur other hidden costs.

“But we are also anxious to see a reduction in transport costs.”

Paul Mwirigi, a business consultant comments; “You expect transport costs to go down and the purchasing power would most likely go up,”

To many consumers, reducing public transport charges coupled with falling food prices would help reduce overall expenditures.

 

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