Matatus at Tea Room bus stage in Nairobi. Matatu owners now say even a Sh20 per litre drop in diesel prices will be hard to translate to each passenger. PHOTO | FILE | NATION MEDIA GROUP Transporters and processors are yet to pass benefits of low fuel prices to consumers over a week after prices dropped.
Matatu owners now say even a Sh20 per litre drop in diesel prices will be hard to translate to each passenger.
When the government introduced 16 percent Value Added Tax on fuel in September 2018, transport costs, including those of matatus, shot up instantly.
The Motorists Association of Kenya even urged its members to keep off roads until they “get fair fuel prices in Kenya”.
This month, the Energy and Petroleum Regulatory Authority (Epra) released the latest guidelines that reflected the international slump in crude oil prices.
Pump prices dropped by the biggest margin since Kenya started controlling prices in 2010, with super fuel being cheaper than diesel for the first time.
Manufacturers who have always ranked transport as a major cost of production, with every change in fuel costs translating to what customers pay for commodities, have demonstrated a loud silence over the relief, which is even expected to increase next month.
Matatu owners now say even a Sh20 per litre drop in diesel prices will be hard to translate to each passenger given that the businesses are badly affected by the Covid-19 pandemic.
Matatu Owners Association chairman Simon Kimutai told the Sunday Nation that apart from being depressed by the pandemic, the matatu business barely makes any return, which he said makes it hard to pass down such benefits when fuel prices drop.
“We are making crazy losses now because there is no movement of passengers. We are not even able to meet operations costs and if we consume, say, 20 litres now to carry 60 people, the net gain there from fuel is Sh200, how do we divide that to 60 people? Fuel is not the only cost we have, there is insurance, wear and tear as well the capital investment itself, which depreciates with time. Matatus increasing fares during rush hours is just normal because every business has its peak season, just like food becomes more expensive during Christmas,” Mr Kimutai said.
His argument has been a common line among producers, who have always used incentives to prop up profits and justify price increases whenever any of […]