• Friday, March 01, 2024
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Why bus fares dropped for second month despite costlier fuel

Bus fares

Intra-city bus fares in Nigeria dropped for the second straight month in November despite rising pump prices of petrol and diesel across the country, the latest transport fare report has shown.

The report by the National Bureau of Statistics (NBS) showed that the average fare paid by commuters for bus journeys within the city per drop declined by 6.23 percent to N1,047.6 from N1,117.3 in October.

The average transport fare paid on okada transportation also dropped by 6.74 percent to N473.1 in November from N507.3 in the previous month.

“What is happening is that probably those states where data were gotten from are seeing lesser demand for transportation services. So, the weight now reflects in the average value computed by the NBS,” Israel Odubola, a Lagos-based research economist, said.

According to him, it is more of a data problem probably in northern states where demand for transport services has gone down because of rising transportation costs.

“The average does not reflect the reality in some states. For instance, demand for transportation services in Lagos is pretty high, if not the highest across the whole federation.”

Adeola Adenikinju, a professor of economics and president of the Nigerian Economic Society, said when the price of petrol increases, the cost of transportation will go up, causing demand to drop.

“Demand is falling because people will reduce the need to travel; some will work from home, trek, share transportation or reduce the time they go out. High cost will reduce demand and that is what we have seen,” he said.

President Bola Tinubu in May scrapped a costly but popular petrol subsidy and lifted currency controls in June, which he said was to save the country from going under.

The removal of the petrol subsidy tripled the pump price to N617 from N184, causing public transportation providers such as buses, tricycles and motorcycles to raise fares. This situation affected those who rely on public transportation, particularly workers in the private sector.

With higher transportation fares, many Nigerians are forced to allocate a substantial portion of their salaries to cover commuting expenses, leaving little for other essential needs like food and rent.

According to the NBS, the average retail price paid by consumers for petrol in May was N238.1 per litre, but it rose to N648.9 in November. The average retail price of diesel also rose from N844.28 to N1,055.6.

The average fare paid by commuters for bus journeys within the city per drop increased by 61.3 percent to N1,047.6 in November from N649.6 in May.

The average fare paid by commuters for bus journey intercity per drop jumped to N6,206.5 from N4,002.2 in May.

The removal of the subsidy shrank the country’s transport and storage industry for the second time in the third quarter, pushing it into recession for the first time in 30 months. According to the NBS, the sector contracted by 35.9 percent compared to a negative growth of 50.6 percent in the previous quarter.

Road transport, a major contributor to the industry, is also in recession as the sub-sector contracted by 43.65 percent in Q3 compared to a negative growth of 55.1 percent in the previous quarter.

Ayodeji Ebo, managing director/chief business officer of Optimus by Afrinvest, said due to higher prices in petroleum products (petrol, diesel and gas), the devaluation of the naira, and higher crude oil prices, growth in the transportation sector stayed in the negative.

“The negative growth was dragged by the road transportation sub-sector. The higher transportation cost will reduce customers’ demand and road transport owners’ margins. However, we expect this to improve in the fourth quarter due to the festive season,” he said.

Samuel Odewumi, a professor and past dean of Lagos State University’s School of Transport and Logistics, noted that transportation is a derived demand and that when the transportation sector freezes, the entire economic life of the country comes to a halt, as it is like the bloodstream for the economy.