Matatus, Uber to increase fare as high fuel prices begin to bite

Matatus at 'Taj Mall' bus terminus, Embakasi.  [David Gichuru, Standard]

Transport costs will go up after matatus and ride-hailing app Uber announced that they will increase fares due to the high fuel prices.

The Matatu Owners Association has advised its members to increase fares for long-distance travel.

Chairperson Simon Kimutai told The Standard that several routes in Nairobi will also see fares increase by between Sh20 and Sh50.

“Fuel prices have increased. We use fuel to move from one point to the other. In such circumstances, why shouldn’t we increase our charges?” he posed.

Mr Kimutai said the various operators across the country will come up with their respective formula of reviewing the fares that they charge.

At the same time, online taxi firm Uber has announced it will increase its prices in the next two weeks following a review of pump prices on Tuesday by the Energy and Petroleum Regulatory Authority (Epra), which saw prices of all petroleum products rise by Sh9 a litre.

The increase was despite the fuel subsidy implemented by the government to cushion consumers against a spike in pump prices.

“We are looking at the pricing, and there is more chance than not that we will be reviewing our rates upwards in order to factor that fuel price increase,” Uber Head of East Africa Imran Manji told a local daily.

In March, Uber announced that consumers in the United States would start paying a surcharge of either $0.45 (Sh52.7) or $0.55 (Sh64.4) on each Uber trip and either $0.35 or $0.45 on each Uber Eats order, depending on their location—with all the money going directly to workers’ pockets.

Matatu is the main transport for most Kenyans, especially in urban areas, with data from the Kenya National Bureau of Statistics (KNBS) showing there were 55,355 public service vehicles (PSVs) last year. This was an increase of 11.7 per cent from 49,560 PSVs in 2020.

However, the taxi-hailing business has also been booming in Kenya, with apps such as Uber, Bolt and Little Cab among the most popular in connecting drivers and riders in major towns.

By end of 2021, there were 31,737 PSVs of less than or equal to 14 seaters, most of which were Ubers. PSV licences issued between January and December 2019 rose by 10.3 per cent to 63,938 from 57,949 in the previous year, according to a KNBS report of 2020.

“This was mainly due to increased licences issued to PSV taxis using mobile apps and registered PSV Saccos and companies in 2019,” said KNBS.

A litre of super petrol will retail at a record Sh159.12 in Nairobi till mid July, and over Sh160 in remote areas, pointing to tough times ahead for motorists still reeling from the high cost of living.

In Nairobi, a litre of Petrol costs Sh159.12, Diesel (Sh140) and Kerosene (Sh127.94). [File, Standard]

KNBS data shows that transport prices have been rising sharply following the re-opening of the economy as countries rolled back the stringent measures aimed at curbing the spread of Covid-19 pandemic.

The data shows that in April and May, transport prices increased by 6.88 per cent and 6.4 per cent respectively.

A litre of diesel, used to power heavy-duty vehicles and machines, will retail at Sh140 in the capital city. Without the fuel subsidy, the pump price of diesel would have been Sh188.19.

This means that production cost for various sectors including agriculture, manufacturing and electricity will also rise as they use diesel to power their activities.

A unit of kerosene will retail at Sh127.94, up from Sh118.94 in the period between May 15 and June 14, 2022. Kerosene is popular among the poor who use it for cooking and lighting.

The increase in fuel prices is attributed to a spike in global prices of crude oil and the depreciation of the Kenyan Shilling, which has made importing expensive.

Pump prices also include the eight per cent value-added tax that started being implemented towards the end of 2018 as well as a myriad of other levies, including excise duty.

They are likely to jump further starting next financial year when the National Treasury begins to phase out the fuel subsidy, which has shielded consumers from the high fuel costs.  

The subsidy was allocated an additional Sh37.8 billion in the second supplementary budget for the financial year 2021-22 as the government tries to cushion motorists from a spike in prices of petroleum products owing to the Russia-Ukraine conflict. ​

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