Cargo hauliers and passenger service vehicle operators are contemplating increasing charges in the wake of rising fuel prices.
Matatu Owners Association (MOA) yesterday said in consultation with its members, it is assessing the impact the new pump prices on their business before making a decision, with an increase on fares among its options.
According to MOA, the sharp rise adds to operational costs, at a time when social distancing in pubic transport to contain the spread of coronavirus is still in place leading to reduced earnings.
On Sunday, the Energy and Petroleum Regulatory Authority (EPRA) announced new prices for the next 30 days, with the cost of petrol, diesel and kerosene increasing by Sh8.19, Sh5.51 and Sh5.32, a litre , respectively.
Motorists in Nairobi are now paying Sh115.18 for a litre of petrol up from Sh106.99.
Diesel widely used by matatus and other transporters is now selling at Sh101.91 a litre from Sh96.40.
Diesel is also use to run power plants, farm machinery and commercial generators with any increase in the cost of production likely to be passed to consumers.
Pump prices had earlier increased by Sh4.57 for diesel in January and Sh0.17 for petrol in January.
In December, there was also a marginal increase of Sh0.97 and Sh1.12 for petrol and diesel, respectively.
MOA chairman Simon Kimutai yesterday said PSVs have been operating at a loss since the reduction on their carrying capacity, with up to Sh15 billion in industry monthly losses, even as fuel prices continue to rise.
“The prices have been going up yet our business is not profitable. The cost of operating has been going up. We are assessing the impact on the fuel prices and will have a decision in the course of the week,” Kimutai said.
Kenya Transporters Association(KTA) has also pointed at a possible increase in the cost of goods in the long-run as transporters move to pass the cost of fuel to cargo owners, and ultimately the end user.
Long-term haulage contracts and bulk fuel purchases among big transporters might however mitigate passing on of transport costs, KTA chief operating officers Mercy Ireri said, but will dent their working capital.
“There is a likeliness of seeing changes especially in small transporters who depend on petrol stations to move. Big players have bulk storages and contracts but the cost of fuel will be eating into their margins,” Ireri said.Loading...
She said the transport and logistic industry continues to face financial constraints, with the pandemic hitting transporters hard mainly by increasing the cost of doing business.
The Motorists Association of Kenya (MAK), umbrella body of drivers and vehicle owner, has since called for an end to price controls.
“These fuel controls make sense no more. Let’s go back to free market.The ethos of fuel control MAK ,fought for and got in 2010 Energy Bill has now been eroded and disregarded by EPRA since it became the authority in charge from former rational ERC,” the association wrote on its Facebook page yesterday.
The association and MOA have also been calling on the government to allow PSV operators carry full capacity, as are airlines and the SGR.
There are over 60,000 matatus and buses operating countrywide, each raking in an average Sh15,000 when operating optimally.
This means the industry’s gross earnings amount to more than Sh1.05 billion on a daily basis, translating into more than Sh30 billion a month when business is normal.
With 50 per cent business, it means the sector is making a loss of about Sh525 million daily, translating to about Sh15 billion (loss) a month.
“There is a lot of discrimination,” Kimutai said, noting that SGR has further been allowed to operate at night when long-distance buses remain restricted.
Transport PS Solomon Kitungu had in an earlier interview with the Star defended airlines and SGR operations saying for SGR, the operator has only re-arranged its trains to create more space.
“The government is looking into the appeal by PSV operators to be allowed to operate at full capacity,” he had said.
The increase in pump prices is expected to influence the cost of living this month after overall year-on-year inflation rose to a nine-month high in January, where it was recorded at 5.69 per cent up from 5.62 per cent in December.
During the month, transport costs went up with its index increasing by 1.07 per cent over the same period mainly due to a rise in the retail prices of diesel and petrol, repetitively–Kenya National Bureau of Statistics.
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