Soaring fuel prices to raise public transport fare

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Kathmandu, June 8

Public transportation commuters are likely to soon bear the brunt of continuous rise in fuel price, especially diesel, as the government is preparing to adjust new public transportation fare with the possibility of it jacking up the cost.

As it has been over two years since the public transportation fare was reviewed and its determinants like fuel and other components (vehicle spare parts and workers’ wages) have gone up over the period, the Department of Transport Management (DoTM) — the transportation sector regulatory body — is gearing up to adjust the new public transportation fare.

The government’s mechanism gives 35 per cent weightage to fuel price and 65 per cent weightage to the price of other components while reviewing public transportation fare.

The government had last reviewed public transportation fare on February 7, 2016. At the time, petrol and diesel used to cost Rs 99 per litre and Rs 75 per litre, respectively. Since then, petrol and diesel have become dearer by Rs 14 per litre and Rs 20 per litre, respectively. Following continuous rise in global crude oil price, petrol and diesel witnessed a price rise by 9.7 per cent and 12 per cent, respectively, through five rate revisions in the last three months (from April 2 to June 2) to their existing prices.

As fuel price has a higher weightage when determining the public transportation fare, constant rise in price of petrol and diesel is certain to affect the commuters.

“Fuel price has surged notably since the last revision in the public transportation fare while other components also have become dearer. Due to the change in the price of all the determinants, the public transportation fare will automatically be adjusted,” said Prem Kumar Rai, acting director general of DoTM.

DoTM has been studying the inflation rate of every component and will soon adjust public transportation fare if necessary, informed Rai.

While transporters are constantly pressurising the government to increase the public transportation fare citing the surge in fuel price, consumer rights activists are questioning the ‘rocket and feather’ policy of the government in adjusting both fuel price and the public transportation fare, meaning that fuel price and public transportation fare in Nepal rise like a rocket and fall like a feather.

“Fuel price cut in the domestic market was sporadic a year back when global fuel price was on a constant decline. But now the global fuel price is rising slowly and the government here is increasing petro prices every fortnight,” states Madhav Timalsina, president of Consumers’ Right Investigation Forum (CRIF).

In the name of implementing the auto-pricing mechanism in fuel price, the government has been increasing fuel price frequently though increasing fuel price will not only raise transportation cost but will also affect the price of all commodities, including daily consumables, which are directly linked to the transportation cost in the country.

Though the recent increment in fuel price could be controlled by mobilising the price stabilisation fund, which has collected almost Rs five billion from fuel consumers and is meant to control the fuel price fluctuation, the government has not made any effort to utilise it. The government has come under severe criticism for keeping the fund idle and making fuel price dearer.

A few days back, Nara Bahadur Thapa, executive director at the Research Department of Nepal Rastra Bank, had told The Himalayan Times that constant rise in fuel price will not only affect livelihoods of people but also the country’s economy.

Written by Nikki Hamal
This news first appeared on https://thehimalayantimes.com/business/soaring-fuel-prices-to-raise-public-transport-fare/ under the title “Soaring fuel prices to raise public transport fare”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.