IN THE MATTER OF THE SURFACE AND MARINE TRANSPORT REGULATORY AUTHORITY ACT (CAP 413)
AND
IN THE MATTER OF AN APPLICATION NO. 1 OF 2009 DATED 14TH JANUARY 2009 BY THE SUMATRA CONSUMERS CONSULTATIVE COUNCIL FOR REDUCING INTER URBAN BUS FARES
ORDER NO. SMTRA/01/ 2009
(Made under Section 16 of the SUMATRA Act, Cap. 413)
1.0 APPLICATION
On 14th January, 2009 SUMATRA Consumer Consultative Council (SCCC) submitted to SUMATRA Application proposing reduction in bus fares for inter-urban buses by 25% from fares which were reviewed in August, 2008.
In their Application and submission to stakeholders, SCCC applied for reduction of fares for ordinary, semi luxury and luxury buses.
1.1 REASONS ADVANCED TO SUPPORT PROPOSAL FOR REDUCTION OF BUS FARES
According to the Application, the proposed bus fare reduction is supported by the following reasons:
(i) fall of fuel prices in the world market and the local market;
(ii) Further fall of fuel prices with EWURA intervention; and
(iii) Bus operators incurring unnecessary costs such as payment of tout expenses and passing them on to consumers.
2. STAKEHOLDERS’ VIEWS
SUMATRA conducted an initial evaluation of the Application and pursuant to Section 18 of the SUMATRA Act found it proper to conduct a public hearing on 28th January, 2009 at Karimjee Hall Dar es Salaam. During the hearing, the SCCC submission was supported by Chama cha Kutetea Abiria (CHAKUA). SUMATRA also received written submissions from Tanzania Bus Owners Association (TABOA), Arusha Kilimanjaro Bus Owners Association (AKIBOA) and Chama cha Wafanyabiashara ya Mabasi ya Kusini.
In supporting the application for reduction of fares, CHAKUA went further and requested fare reduction by 40% based on fuel price decline.
Bus operators on the other hand opposed the application for the reason that in spite of a huge fall in reduction in fuel prices; spare parts and other cost variables like wages, repairs and maintenance, insurance, loan interest charges, government taxes and other overheads continued to rise. It was also part of the operators’ arguments that it was too early to consider a reduction in bus fares.
3.0 ISSUES
The Board focused on the following issues:
(1) Whether review of fares and charges within the context of Section 16 of the SUMATRA Act includes power for downward review;
(2) Which factors necessitate review of bus fares;
(3) Whether adjustment of current fares should be considered on the basis of changes in fuel prices alone or should take into account all other key variables such as, capital cost, interest rate charges, wages, repair and maintenance, rate of return, foreign exchange and inflation.
4.0 MATTERS TAKEN INTO ACCOUNT
SUMATRA’s analysis of the issues was based on the following considerations:
(a) Cost of producing transport services which include cost of capital, depreciation, interest rate, insurance, wages and fuel.
(b) Macro economic indicators;
(c) Stakeholders’ views as expressed verbally during the Stakeholders’ Meeting and written submissions to SUMATRA.
(d) The fall in fuel prices world wide and locally since August, 2008.
(e) Statutory requirements provided in Sections 5, 6, 16, 18 and 19 of SUMATRA Act, No. 9 of 2001 including the cost of rendering bus services, consumer and bus operator interests.
4.1 FINDINGS
The Board reviewed the arguments both in support and in opposition taking into account the statutory requirements provided in Sections 5, 6, 16, 18 and 19 of SUMATRA Act and found that:
(i) As stated by SCCC and other stakeholders it was indisputable that there was a fall of fuel prices which benefited bus operators;
(ii) The national average of diesel price per liter declined from TShs.2,060.47 in July 2008 to TShs.1,554 by 3rd of February 2009, a decrease of about 24.5% since the last fare review;
(iii) SCCC submission justifying 25% reduction of bus fares included other costs such as touts, fines and other expenses which cannot be easily taken into account in determining bus fares;
(iv) Section 16 of SUMATRA Act, provides that the Authority may carry regular review of bus fares after having regard to costs of rendering services, operators interest, return on investment and desire to make profit and the consumers’ interest of paying fairly for the services.
5.0 BOARD OBSERVATIONS
In view of the SCCC Application, submissions, stakeholders’ views, analysis and findings, the Board observed as follows:
(1) Section 16 which empowers SUMATRA to carry out regular review of charges and rates, includes the power to raise or reduce charges and rates, as the case may be.
(2) SUMATRA is statutorily bound to protect the interests of consumers on the one hand and financial viability of suppliers of services on the other, and hence, the need for the Board to act fairly and balance the interests of both parties.
(3) Bus operators have an obligation to address consumer concerns taking into account the relief in fuel prices being enjoyed.
(4) It is unfair for bus operators to include touts, fines and other unnecessary costs in their cost structure and pass them on to passengers.
(5) The inflation which had reached 13.5% by February, 2009 from 9.5% registered in July 2008, and price increase due to fluctuation of foreign exchange did not affect bus operators alone but the entire society including low income earners and disadvantages groups.
(6) There was need to establish guiding criteria which may necessitate bus fare review.
(7) The Board agreed with SCCC on the need to review bus fares equitably.
6.0 ORDER
6.1 Fare Reductions
In view of the foregoing and in an effort to maintain fair and affordable road public transportation services, the Board at its 23rd Ordinary Board Meeting held on 27th February, 2009 approved, decided and ordered as follows:-
(a) 11% reduction of fare for ordinary bus for operations on paved road which becomes TShs. 26.6 per km ;
(b) 11.6% reduction fare for ordinary bus for unpaved roads which becomes TShs.32.70 per km;
(c) 3% reduction for semi luxury bus which becomes TShs.40.70 per km;
(d) 10% reduction for luxury bus fares which becomes TShs.46.41 per km;
The table below depicts the sample of the reduced inter-urban bus fares:
|
ORDINARY BUS |
|
ROUTE |
CURRENT FARES |
APPROVED FARES |
|
Dar - Bukoba |
43,500 |
38,600 |
|
SEMI LUXURY BUS |
|
ROUTE |
CURRENT FARES |
APPROVED FARES |
|
Dar - Mbeya |
37,000 |
35,900 |
|
LUXURY BUS |
|
ROUTE |
CURRENT FARES |
APPROVED FARES |
|
Dar - Arusha |
35,200 |
31,400 |
(e) Bus fare review will be done either:
(i) Annually;
(ii) In the event of Return on Investment being below 5% or above 25%; or
(iii) Any other factor which may necessitate fare review.
6.2 Follow up Measures
Bus operators must continue to comply with conditions of licences including;
(i) All bus operating staff must wear neat uniforms and tags showing their names.
(ii) Passengers and bus crew must fasten seat belts while traveling.
(iii) Standing or extra passengers shall not be allowed on inter urban bus services;
(iv) Adequate insurance cover for all passengers must be provided.
(v) Operators must adhere to approved timetables, official tariffs including free passenger baggage allowance up to 20 Kg.
(vi) Bus operators are prohibited from shortening, changing routes and engaging in any form of harassment.
(vii) Due compliance with laws and regulations governing road transport bus services.
6.3 Actual fares in terms of distances are attached in the schedule which forms part of this Order.
6.4 A detailed report on the application is also available for
inspection and/Public information in all SUMATRA offices and website.
7.0 EFFECTIVE DATE
This order shall be effective from 12th March, 2009.
