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News Analysis: The Impact of Soaring Oil Prices on the Transport Sector

By Biruk Alemu 

Addis Abeba-The soaring fuel prices have greatly impacted the transportation services, Addis Ababa City public transport users and taxi drivers told Addis Standard. According to various economists and international reports, oil prices have risen sharply as a result of the Russia-Ukraine war to the extent that the price of a single barrel of crude oil has risen to $140, which is a significant increase since mid-2008. The oil price hikes at the international level have put Ethiopia, which has already been languishing in high inflation due to civil war, drought, and other factors, placing the country in a difficult position.  

Due to the price increment in the international market, the Ethiopian government announced last month that oil prices would be augmented too. Addis Ababa Transport Bureau, on its part, subsequently stated an increment of transportation fees for taxis ranging from 0.50 cents to 3.50 ETB. The government warned that it would take action against those who raise prices on utilities or consumer goods following its oil price adjustment. This warning hasn’t stopped ‘entities’ from increasing prices, residents told Addis Standard. According to the residents’ testimonies, the cost of living has skyrocketed right after the government’s oil price adjustment, and said they have so far been subjected to unnecessary hustles to find affordable transportation. 

According to various segments of Addis Abeba’s residents, who gave their testimonies to Addis Standard, the day after the government raised the price of fuel, business owners and transport providers started simultaneously increasing their respective prices. They added that the move has exacerbated the already high cost of living in the city. 

Following the oil price adjustment in the country, Addis Abeba City Administration Transport Bureau announced its decision of revising the tariffs for mid-bus and mini-bus transport vehicles to be implemented from June 8th of 2022 in accordance with its assessment.  

Regardless of the city’s Transport Bureau warning of taking punitive actions against transport service renders who are found to increase prices other than what it stated the tariff ought to be, residents told Addis Standard that they had encountered taxis and other service providers involved in increasing the price against what the Bureau had underlined. “The government’s price adjustment has heavily impacted us,” they added. 

What do Addis Abeba Residents say?

Sema Mengistu, a resident of Addis Abeba, spoke to our correspondent regarding the impact of the oil price adjustment. “Following the rise in 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 the taxis have increased their fares, public transport users have shifted to look for scarcely available city buses that have resulted in long queues. This has led to a shortage of buses, making it difficult for the community to use its time effectively and efficiently.” 

Sema further went on to say that the taxis have significantly increased their fares following the oil price adjustment. “For instance, where the fare from Megenagna to Bole Arabssa is supposed to be 15 birr, they doubled it when it gets dark,” adding, “ When you go out for shopping, you’ll notice alarming price hikes which the business owners tell you that the transportation increments have forced them to do so.”

“The increase in fuel has caused the price of items from the rural districts to rise and exposed the community to a high cost of living. Drivers of food commodities from the rural areas have increased prices due to increased fuel prices. Due to rising fuel prices, traders have also raised prices in the community, “ Henok Moges, another resident of Addis Abeba, said expressing his complaints.  

The Communications Director of the Ministry of Trade and Regional Integration, Kumneger Eshetu, told Addis Standard that a task force was established three months ago and is currently working to manage the inflation as a result of higher oil prices.

What effect does the fuel increase have on taxi drivers?

According to taxi drivers interviewed by Addis Standard at the Megenagna area in the capital, the government raised fuel costs without considering the effect it would have on taxi drivers. “The increase in fuel prices has led to a considerable increase in the cost of spare parts. Concerned bodies should resolve the matter,” they added.

“Rising fuel prices have affected taxi owners. We have not been able to buy spare parts,” Ato Tadele Wolde Michael, a taxi driver, and owner, told Addis Standard. “Due to the fuel price increment and tariff adjustment, spare part vendors are raising prices. The transportation tariff has only been increased merely 50 cents to 2 birr whereas the price of spare parts, such as motor oil, filters, tires, belt, and other products, has dramatically increased as a result,” He lamented experiencing such high costs.

Explaining the alarming price, Tadele stated that previously engine oil used to cost about 800 birr which now costs more than double: 1,800 birr. “We used to buy filter oil at 150 birr but now it has gone up to 250 birr. A single tire was approximately 3,000 birr which has now nearly tripled to 8,000 birr,” he kept complaining. He further explained that being a taxi driver has now become the job you would do only when you don’t have another option. “It has become worthless,” he said. According to him, the government and taxi riders have not understood what he and other taxi drivers have endured. 

Tesfaye Tamirat is another taxi driver that Addis Standard spoke to regarding the impact of oil price increment on his job. “The oil price adjustment has resulted in an alarming price increment on spare parts,” he expressed his astonishment. 

According to Tesfaye, a brake which he used to buy at a cost of 400 birr has now gone up to 830 birr. He further underscored that the government should intervene and control how spare part sellers and doing their business in the city and said affording the cost has become ‘unattainable’. He also said that some taxi drivers, dealing with ‘controllers’, are charging the public higher tariffs just to afford buying spare parts. 

“Driving has now become unprofitable and is the job you do when you don’t have another option. All we earn is going towards the vehicle’s maintenance and spare parts. We can’t stand the high cost of living, including house rent and managing expenses for the households,” Tesfaye said. 

Mesay Zewdu, another driver, called on the government to look for options directed at the availability of affordable spare parts instead of its planned program of subsidizing oil. 

Depletion of Sheger bus and its effects 

The Addis Ababa Transport Bureau has contracted more than 400 cross-country buses with private service providers and named them “Sheger Support buses” to provide services. Since these buses became operational, they have alleviated the problem of transportation to some extent in the city. However, currently, the number of these buses has dwindled and the users are being exposed to indescribable difficulties. Following the cessation of these buses’ operation, taxis have alarmingly been increasing their tariffs which have resulted in shortages of means of transportation and unnecessary inconvenience for commuting residents. 

A local media outlet quoted several residents of Addis Abeba saying,” the transportation problem in the city has hindered them from working and has become a hurdle for life,” adding,” the illegal activities, including unfair tariff charges, by transport service providers during work rush hours have become a serious challenge.” These residents further said that the shutting down of ‘Sheger Support buses’ has resulted in such chaos. 

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

Addis Standard’s attempts to get hold of suppliers of petroleum, the Ministry of Trade and Regional Integration, the Addis Ababa Transport Bureau, and the Public Relations Officer of the City Government for further commentary were unsuccessful.AS

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