Commercial transport hike expected this week

A major increase in commercial road transport fares – as early as this week – now seems inevitable as the government negotiates with unionized operators in a desperate late attempt to minimize the size of the impending increase which threatens to reignite double-digit consumer price inflation.

Already the Ghana Private Road Transport Union (GPRTU) has had to exert its huge influence to hold back immediate, uncoordinated increases in commercial transport fares as operators, who have been held back from increases over the past year, are raring to take advantage of newly introduced levies and taxes on energy to increase their prices.

The impending fare hikes are certain to significantly impact on consumer price inflation in Ghana just after it returned to single digits, having recorded 8.5 percent in April, its lowest level since March 2020. Most economists fret that when the dust settles after the impending transport fare hikes, inflation will be back in double digits again.

Indeed, the immediate cause of the impending price hike is the adjustments in price of petroleum products by some of the major oil marketing companies.

This was after Shell and Total have increased their prices by a little over 12 per cent, with a litre of diesel and petrol selling at ¢6.13. Another major player, Allied is selling a litre for ¢6.10. It is yet unclear how the reduction in margins by the National Petroleum Authority will affect prices, its being introduced to curb fuel increases resulting from the implementation of the new fuel taxes.

According to the Association of Oil Marketing Companies, the prices are going up because its members are just applying the 0.30 pesewas on the price buildup of petroleum products as announced in the budget and the 0.17 pesewas introduced by the National Petroleum Authority (NPA).

But while negotiations are ongoing with government officials the GRPTU has called on all stakeholders to disregard any purported increase in transport fares.

In a statement jointly signed by Godfred Abulbire, General Secretary of Ghana Private Road Transport Union (GPRTU), and Emmanuel Ohene Yeboah, Ghana Road Transport Coordinating Council, the Transport Operators said following recent increase in the price of petroleum product, they commenced negotiations with stakeholders to determine an appropriate fare adjustment acceptable to all operators and the general public.

It said the next round of negotiation has been scheduled for this week by which time, the appropriate fare adjustment would be made known to the general public.

Many passengers anticipated that transport fares in the country will increase immediately after the government’s new tariffs, including a 30-pesewa hike in petroleum products, which kicked in on Saturday, May 1, 2021.

An increase in transport fares is most likely to also affect the general cost of goods and services in the country.

The National Petroleum Authority (NPA), however on Tuesday last week reduced the 17-pesewa increase in the margin on the prices of petroleum products to nine pesewas.

Many transport unions have already announced an impending upward review of fares.

For instance, the Ghana Private Road Transport Union (GPRTU) has stated that the fares could go up by as much as 20% which will factor in more than just the current fuel prices.

The General Secretary of the GPRTU, Godfred Abulbire, says that they are hopeful of finalizing negotiations with government shortly.

Mr Abulbire says that the Union is optimistic that government will accept their proposals, citing current economic conditions and rising cost of operations for the various Transport unions in the country.

“We should also realised that we are not just looking at fuel prices but other cost components that have been increased recently,” he adds.

Asked whether a 15 per cent adjustment in transport fares will be enough to deal with their issues, the General Secretary responded that they believe it’s okay for now to help slip.

However, a group known as the Concerned Drivers Association has indicated that it will increase transport fares by 40 percent.

According to them, their resolve to increase the fares holds, despite the government’s announcement of a reduction in the price of fuel by eight pesewas per litre.

The Spokesperson for the Concerned Drivers Association, David Agboado, says fares will still go up significantly.

He indicates that they considered various factors, including the anticipation of a general increase in the cost of fuel in the coming weeks on the world market.

“The OMCs have their own margin that they will bring out later because we know that the world market will be shooting up from today to the 15th. The first window will come out and when it does, it will be more than that 27 cedis so based on that, we’ll stick with the 40% we want to take” he said.

This is unlikely to happen though as the GPRTU usually takes a much less hawkish stance, often to the chagrin of many of its members. The consensus forecast by industry analysts as at the end of last week was a 20 percent increase. Although they admit that initially at least, some transporters will try to breach this before being reeled in by union directives and passenger resistance.

But even a 20 percent increase would push Ghana’s consumer price inflation back into double digits as traders in particular have the tendency to pass any transport fare increase of 10 percent or more fully onto their own customers.

Ghana’s inflation rate fell to 8.5 percent in April, down from 10.3 percent in March. It was the lowest inflation rate since March 2020, driven mainly by a slowdown in food prices (from 10.8 percent to 6.5 percent) particularly in the Greater Accra region as the effects of COVID 19 begin to ease. On the other hand, non-food inflation rose slightly (from 10.2 percent to 10.0 percent).

The inevitable impending rise in prices will derail the Bank of Ghana’s projections – made last year – that inflation would have fallen back to around the median of its target band of between six percent and 10 percent (i.e., eight percent) by the second quarter of this year. Instructively without the impending transport fare hikes that forecast was on the way to being fulfilled.