Bus fare rollback?
The Jamaica Urban Transit Company (JUTC) is currently conducting an analysis of falling fuel prices to determine if the savings are enough to roll back bus fares, but one economist is warning that such a move would be foolish.
The latest ex-refinery prices published by Petrojam show that petroleum prices have plummeted locally by close to 25 per cent since June, but JUTC Managing Director Colin Campbell says this only translated to a saving of just over $100 per litre up to the end of October last year.
However, Campbell conceded that for November and December the State-owned bus company, which was granted a 25 per cent fare increase in July, saw "significant savings" in its fuel charges and was now conducting an analysis to determine the extent of the savings.
"I can assure you that if it indicates anything over and above where we were in July, in terms of the savings, then we will make a recommendation ... we have no difficulty in passing them back once we get the approval of the [JUTC] board and the [transport] ministry," Campbell said.
He said the analysis would be completed this week and submitted to the Reverend Garnett Roper-chaired board of directors for consideration.
However, economist Ralston Hyman argued that despite slashing its losses from $200 million to $50 million per month, the JUTC is still not in a position to reduce bus fares.
Hyman said with the JUTC's annual losses hovering around $600 million annually, any move now to reduce bus fares would mean that, sooner or later, commuters would again be asked to pay more.
"They are still making significant losses, so they would still have to go back to the public for more money to fund their operations, so that wouldn't be a sensible move," he argued.
"It would be penny wise and pound foolish," Hyman continued.
In addition, he said with the JUTC still dependent on public funding, its annual losses would have to be absorbed by the Government and could derail the country's economic programme with the International Monetary Fund.
Last Thursday, Petrojam - the State-owned oil refinery - published ex-refinery prices of $92.93 per litre for 87 Octane; $94.58 per litre for 90 Octane; $94.40 per litre for automotive diesel and $101.26 per litre for ultra light sulphur diesel (ULSD).
In June, the ex-refinery prices were $128.10 per litre for the 87 Octane; $129.75 per litre for the 90 Octane; $129.17 per litre for automotive diesel and $134 per litre for the ULSD.
While noting the decline, Campbell argued that some aspects of the fixed fare structure used by the JUTC places the company at a disadvantage. As an example, he pointed out that the JUTC's prices are reviewed annually.
"So the year before we got this new price [fare increase] the fuel rate was set at somewhere between $87 and $90 and we were paying over $100... so sometimes you win and sometimes you lose when you have a fixed fare," he sought to explain.