Reform Agenda. Transport Policy. Performance Policy Parameters

Transcription

1 CRITERIA FOR REFORM & REGULATION OF BUS TRANSPORT Amal S. Kumarage Professor of Civil Engineering, University of Moratuwa, Sri Lanka

2 Reform Agenda Transport Policy Profile Performance Policy Parameters

3 The Policy on Bus Transport The policy depends on the role of buses in the wider transport function in the pursuit of socio-economic and environmental objectives of a country or city. For example Sri Lanka being one of the densely populated countries in the world, the bus is the most suited for an efficient and costeffective transport system.

4 % S h a re Years Public Bus Private Railway Para Transit

5 Proportion of Households with Regular Spending on Transport 0.8 Proportion of Households /86 90/91 95/96 Ship/Air Train Para-transit Bus Postal/Communication Private Vehicle

6 Annual Cost for Passenger Transport (Economic) Rail Servic Rs 7 bn (8% cost for 5% of pax) Bus Transport Rs 30 bn (35% cost for70% of pax) Private Vehicles Rs 48 bn (57% cost for 25% of pax) Total Rs 85 bn

7 Lesson #1 There should be a good framework on transport policy Some poor policy for reform in the bus sector Reduce State subsidy Increase Private Sector Participation

8 Reform Agenda Transport Policy Profile Performance Policy Parameters

9 The Profile of the Bus Transport Service Market Share: e.g. 70 percent of passengers Growth: e.g. Historical 4-5% p.a. Provision: e.g. 35% by 13 State companies and rest small scale private operators Fares: e.g. Regulated by State revised annually Dispatching: e.g. On fixed times where headways are set to fill a bus before departure. Competition: e.g. Post-departure, on route. Subsidies: e.g. PSOs for rural services, school children and State companies 10% of operating + capital.

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11 The Profile of the Bus Transport Service Market Share: e.g. 70 percent of passengers Growth: e.g. Historical 4-5% p.a. Provision: e.g. 35% by 13 State companies and rest small scale private operators Fares: e.g. Regulated by State revised annually Dispatching: e.g. On fixed times where headways are set to fill a bus before departure. Competition: e.g. Post-departure, on route. Subsidies: e.g. PSOs for rural services, school children and State companies 10% of operating + capital.

12 Lesson #2 There should be a good understanding on the actual profile of the bus sector

13 Reform Agenda Transport Policy Profile Performance Policy Parameters

14 Performance of the Bus Sector Quality of Service Travel Time & Delay Reliability Overloading Comfort Value Added Services Level of Service Priority Trips (First bus, last bus, school trips etc) Safety Vehicle Standards Crew Standards

15 Load Factor in Buses in Sri Lanka ( ) Year Load Factor

16 Performance of the Bus Sector Quality of Service Travel Time & Delay Reliability Overloading Comfort Value Added Services Level of Service Priority Trips (First bus, last bus, school trips etc) Safety Vehicle Standards Crew Standards

17 Fi g u re 7 B u s P a s s e n g e r Fa ta l i t i e s p e r B i l l i o n Pa s s e n ge r k m s i n S ri La n k a ( ) Private State Fatality Rate Year

18 Lesson #3 We need to correctly understand the end product (benefit) expected from bus transport.

19 Reform Agenda Transport Policy Profile Performance Policy Parameters

20 Policy Parameters for Bus Transport Control of Fares (Affordability vs Quality) State Assistance (Subsidy vs tax exceptions) Providers Providers (State vs Private Sectors) State Control (Regulated or Unregulated)

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22 Policy Parameters for Bus Transport Control of Fares (Affordability vs Quality) State Assistance (Subsidy vs tax exceptions) Providers Providers (State vs Private Sectors) State Control (Regulated or Unregulated)

23 Fares When it should be controlled and when not Basic Services Premium Services How Fares can be determined Operating Cost based (Viable Fare) Affordable Fare Market Based (Demand-Supplied determined fare)

24 Policy Parameters for Bus Transport Control of Fares (Affordability vs Quality) State Assistance (Subsidy vs tax exceptions) Providers Providers (State vs Private Sectors) State Control (Regulated or Unregulated)

25 State Assistance Should the State Assist or should they be entirely market based? If so, what instruments are available for delivery? PSO s General Subsidies Tax Exemptions

26 Policy Parameters for Bus Transport Control of Fares (Affordability vs Quality) State Assistance (Subsidy vs tax exceptions) Providers Providers (State vs Private Sectors) State Control (Regulated or Unregulated)

27 Providers Who should provide bus services? State or Private Sector Monopolies or Many Operators Companies or Informal Small Scale Operators

28 Why we need the Privately Operated Bus Services? When scope of demand for bus transport is extensive and State is not able (or willing) to provide adequate (a) investment or (b) management supervision or (c) both. To reduce the risk of a potential (particularly sudden) discontinuity of all bus services (the dominant mode of transport in Sri Lanka) due to trade union action when bus services are operated by a State agency. To bring about innovation, marketing and risk taking that is necessary to systematically improve bus services, for which the private sector is better equipped.

29 Policy Parameters for Bus Transport Control of Fares (Affordability vs Quality) State Assistance (Subsidy vs tax exceptions) Providers Providers (State vs Private Sectors) State Control (Regulated or Unregulated)

30 State Control Can we have unregulated bus transport? If not, what aspects should be regulated How should it be regulated? Who should regulate?

31 Why an Effective Regulator for Bus Transport is needed? To manage the supply of buses For qualitative continuity of non-profitable services To balance quality and fare Remove barriers for entry of bus operators To develop the bus service as a network of services and routes To protect the rights of the bus passenger

32 State Control Can we have unregulated bus transport? If not, what aspects should be regulated How should it be regulated? Who should regulate?

33 Possible Models for Developing Bus Operations Permit System: (which is the practice in Sri Lanka) Supervised Competition through Route Associations: (Buenos Aires, Caracas, Istanbul, Manila.) Route Franchising (UK, Costa Rica, New Zealand. Market Partitioning (Dakar, Hong Kong, Bangkok)

34 What appears most appropriate for Sri Lanka to use route associations, route franchising and market partitioning simultaneously to ensure competition between quality and cost to have a manageable number of corporate providers

35 State Control Can we have unregulated bus transport? If not, what aspects should be regulated How should it be regulated? Who should regulate?

36 Lesson # 4 The right combination of policy parameters should be chosen to achieve the end benefits.

37 Bus Fares Policy in Sri Lanka Commenced from 1 st July 2002 Makes Fares linked to Cost and Quality (load factor) Makes fare revisions regular Eliminates fare anomalies Depoliticizes fares and brings stability to industry

38 Process of Calculating the New fares Estimation of Base Year Operating Cost per Buskm through empirical data analysis of input prices and standard technical performance levels Estimation of Current Year Operating Costs through cost inputs linked to indices and standard technical performance levels Estimation of Current Year Fares as % of Base Year Fares, adjusted for Changes in Quality of Transport provision Fare Anomalies

39 Base Year Operating Cost

40 Variants of Bus Operations Type of Route Type of Service (normal, A/C) Size and Age of Bus Country of Origin Trips and Hours of Operation per day Kms per day and Speed of travel Days operated per month and Route Supply Level Load Factor (Quality of Service)

41 Ten Representative Routes Low Country Long Distance (normal & a/c) Up Country Long Distance (normal & a/c) Regional Urban Line Haul (normal & a/c) Urban Cross Town Urban Feeder Rural

42 Cost Components *Fuel (tare of bus, type of service, cost of diesel) * Crew (hours of work, wage rate, EPF/ETF/Gratuity) *Oil & Lubricants (oil consumption rate, cost of fuel, servicing) *Tires & Tubes (tyre wastage, cost of tires and tubes) * Air Conditioning (repair, refil of gases, fuel consumption) * Repairs (engine/body work, minor repairs- labour and parts) * Daily Overhead (tickets) * Monthly Overheads (log sheets, administrative costs) * Annual Overheads (license, insurance, route permit, fitness) * Depreciation(value of bus, depreciation rate) * Interest on Capital (Prime Lending Rate, Treasury Bill

43 Calculation of Costs Costs per Route based on Route Characteristics Operational Characteristics Regulation (Supply Level) Weighted Route Cost based on Weighting buses per route type

44 OPERATIONAL COST (RS/KM) C1. Fuel Cos t (Diesel) C2. Crew Cos t C3. Service & Lubricants C4. Tires & Tubes C5.Air Conditioner (maintenece+ overhaul) C6. Repairs C7. Daily Overheads C8. Monthly Overheads C9. Annual Overheads C10. Depreciation of Bus C11. Financing of Bus C12. Provis ion for Risk Total Cost

45 Calculation of Current Year operating Costs

46 INDICES USED FOR REVISION OF COSTS C1. Fuel Cost (Diesel) Price C2. Crew Cost Wage C3. Service & Lubricants Price, C4. Tires & Tubes Price (CEAT(New), DAG(Rebuilt) C5. Air Conditioner Repair, Prices C6. Repairs C7. Daily Overheads All Prices C8. Monthly Overheads All Prices C9. Annual Overheads All Prices C10. Depreciation of Bus Value of Price C11. Financing of Bus Treasury Bill Rate + Prime Lending Rate C12. Provision for Risk Fixed %

47 Computation of Current Year Fares Base Year BOC (Base Year Fare Index =100) Current Year BOC Current Year Fare Index = Current Year BOC/Base Year BOC * 100 Current Year Fares = Base Year Fares adjusted for anomolies to sum up to Current Year Fare Index

48 COST INCREASE DEC 00 TO MAY 01 December May % C1. Fuel Cost (Diesel) C2. Crew Cost C3. Service & Lubricants C4. Tires & Tubes C5.Air Conditioner (maintenece C6. Repairs C7. Daily Overheads C8. Monthly Overheads C9. Annual Overheads C10. Depreciation of Bus C11. Financing of Bus C12. Provision for Risk Total Cost

49 Adjustments to fares Fare Anomalies Quality

50 BASE YEAR 1980 Year Dec-00 May-01 % p.a New Bus (40 seater) Diesel (litre) New Tire (CEAT 900 x 20) US $ CCPI Cost (Rs/km) Bus Fares 1st nd rd th th th th

51 PERFORMANCE INDICATORS CBR LF % LF LD (LC) LD (LC) (AC) LD (UC) LD (UC) (AC) Regional ULH ULH (AC) UCT Feeder Rural Total

52 Fares Formula Step on Fare (presently 5 kms Reduce to 3) Based on per km (reduce taper from 42% to 70%) Adjustments for Mid Country Up Country Type of Service Rural Services

53 Fare Increase Fare Inc. = Cost Inc. + Provision for Quality

54 FARE FORMULAE Step on Factor (equivalent kms) Luxury Fare Factor Mid-country Factor Up-country Factor Rural Factor Present 1st Inc 2nd Inc 3nd Inc 4th Inc Year Stages Kms 1 to 2 0 to pc 3 to 7 5 to pc 8 to to pc 16 & up 30 & up pc Cost Increase (%) 8.9 Fare Increase (%) Balance for Quality Improvement (%) 1.6 Load Factor (%)

55 Figure 1: Forecasted Fare Revision ( ) Fare Rs/Km Distance (kms) Existing

56 10% FARE INCREASE Section Present

57 THANK YOU