News analysis: the impact of soaring oil prices on the transport sector

By Biruk Alemu

Addis Ababa-Soaring fuel prices have had a huge impact on transport services, public transport users and taxi drivers in the city of Addis Ababa said. Addis Standard. According to various economists and international reports, oil prices rose sharply as a result of the Russian-Ukrainian war to the point that the price of a single barrel of crude oil rose to $140, which is a significant increase since the mid-2008. Rising international oil prices have put Ethiopia, which was already languishing in high inflation due to civil war, drought and other factors, putting the country in a difficult position.

Due to rising prices in the international market, the Ethiopian government announced last month that oil prices would also be increased. The Addis Ababa Transport Bureau, for its part, later declared an increase in transport charges for taxis ranging from 0.50 cents to 3.50 ETB. The government has warned it will take action against those who raise the prices of utilities or consumer goods following its oil price adjustment. This warning hasn’t stopped ‘entities’ from raising prices, locals say Addis Standard. Residents say the cost of living skyrocketed right after the government adjusted the price of oil, and said they have so far been subjected to unnecessary scrambles to find affordable transport .

According to various segments of Addis Ababa residents, who testified Addis Standard, in the aftermath of the government’s fuel price increase, contractors and carriers began to raise their respective prices simultaneously. They added that the move exacerbated the already high cost of living in the city.

Following the adjustment of oil prices in the country, the Addis Ababa Municipal Administration Transport Office announced its decision to revise the fares of mid-bus and mini-bus transport vehicles to be implemented in from June 8, 2022 in accordance with its assessment.

Regardless of the City’s Transportation Bureau’s warning to take punitive action against rendered transportation services that raise fares other than what it said the fare should be, residents told Addis Standard that they had encountered taxis and other service providers implicated in raising the price. against what the Bureau had pointed out. “The government’s price adjustment has strongly impacted us,” they added.

What are the people of Addis Ababa saying?

Sema Mengistu, a resident of Addis Ababa, spoke to our correspondent about the impact of oil price adjustment. “As a result of rising fuel prices, the cost of living has skyrocketed, which has forced [Addis’s] residents to use Sheger and Anbesa buses [the city’s bus]. Because taxis have increased their fares, public transport users have turned to the scarcely available city buses, leading to long queues. This resulted in a shortage of buses, which made it difficult for the community to use their time effectively and efficiently. »

Sema added that taxis had significantly increased their fares following the oil price adjustment. “For example, where the fare from Megenagna to Bole Arabssa is supposed to be 15 birr, they double it when it gets dark,” adding, “When you go out for shopping, you will notice alarming price increases that owners of company tell. that increases in transport have forced them to do so.

“Rising fuel prices have pushed up the price of items from rural districts and exposed the community to a high cost of living. Rural food drivers increased prices due to higher fuel prices. Due to rising fuel prices, traders have also raised prices in the community,” said Henok Moges, another resident of Addis Ababa, voicing his complaints.

The Director of Communication of the Ministry of Trade and Regional Integration, Kumneger Eshetu, said Addis Standard that a task force was created three months ago and is currently working to manage inflation due to rising oil prices.

What effect does increased fuel have on taxi drivers?

According to taxi drivers interviewed by Addis Standard in the Megenagna region of the capital, the government has increased fuel costs without considering the effect it would have on taxi drivers. “The increase in the price of fuel has led to a considerable increase in the cost of spare parts. Relevant agencies should address the issue,” they added.

“Rising fuel prices have affected taxi owners. We have not been able to purchase spare parts,” taxi driver and owner Ato Tadele Wolde Michael told Addis Standard. “Due to the fuel price increase and tariff adjustment, spare parts suppliers are increasing their prices. The transport tariff was only increased from 50 cents to 2 birr while the price of spare parts, such as engine oil, filters, tires, belt and other products, increased significantly in consequence”, he lamented in the face of such high costs.

Explaining the alarming price, Tadele said engine oil used to cost around 800 birr, which now costs more than double that: 1,800 birr. “We used to buy filter oil at 150 birr, but now it has gone to 250 birr. A single tire used to cost around 3,000 birr, which has now almost tripled to 8,000 birr,” he complained incessantly. He further explained that being a taxi driver has now become the job you would only do when you have no other option. “It became worthless,” he said. According to him, the government and the taxi drivers did not understand what he and the other taxi drivers went through.

Tesfaye Tamirat is another taxi driver whom Addis Standard spoke to about the impact of rising oil prices on his job. “The oil price adjustment has led to an alarming increase in the price of spare parts,” he expressed astonishment.

According to Tesfaye, a brake he previously bought for 400 birr has now gone to 830 birr. He further stressed that the government should step in and control how spare parts vendors do business in the city and said the cost has become “unattainable”. He also said that some taxi drivers, dealing with “controllers”, charge the public higher fares just so they can buy spare parts.

“Driving has now become unprofitable and it’s the job you do when you have no other option. Everything we earn is used for vehicle maintenance and spare parts. We cannot bear the high cost of living, including renting houses and managing household expenses,” Tesfaye said.

Mesay Zewdu, another driver, called on the government to seek options that focus on the availability of affordable spare parts instead of its planned oil subsidy scheme.

Sheger bus burnout and its effects

The Addis Ababa Transport Bureau has contracted over 400 buses across the country to private service providers and named them “Sheger Support Buses” to provide services. Since these buses became operational, they have alleviated the transport problem in the city to some extent. However, currently, the number of these buses has decreased and users are exposed to indescribable difficulties. Following the cessation of the operation of these buses, taxis have alarmingly increased their fares, leading to a shortage of means of transport and unnecessary inconvenience for residents on the move.

A local media quoted several residents of Addis Ababa as saying “the transport problem in the city has prevented them from working and has become an obstacle for life”, adding “illegal activities, including unfair tariffs, by service providers of rush-hour transportation services to work has become a serious challenge, and these residents further said that the closure of “Sheger support buses” has led to such chaos.

Addis Ababa Transport Bureau Communications Director Etsegenet Abebe told the aforementioned outlet that some of the bus services have been halted since May 9, 2022, due to a request for fares and fees. service. She added that the office is working to find a solution based on research.

Addis Standard’s attempts to get hold of oil suppliers, the Ministry of Commerce and Regional Integration, the Addis Ababa Transport Bureau and the city government’s public relations officer for further comments have been unsuccessful.AS

Previous New monetary policy to give priority to controlling the rise in commodity prices
Next OSFI makes changes to home loans to reduce lender risk