Mass transit programme will reduce transportation cost -Aganga
Thursday, January 26, 2012

The Minister of Trade and Investment, Mr. Olusegun Aganga, has said that Federal Government’s Mass Transit Programme would reduce the cost of transportation across the country. Speaking during the flagging off of the operations of the mass transit buses in Abuja, Aganga said the Federal Government was committed to ensuring the successful implementation of the policy.

“If you look at the transportation cost, it has four major areas, which are: maintenance cost, financing cost, overhead cost, fuel cost and. However, the only part that was affected by the removal of the fuel subsidy was the fuel cost. If you look at the cost and the contribution to the total cost, fuel contributes about 26 per cent of the total cost of transportation fare.
“Assuming you were buying PMS at N141, the maximum increase in transport fare should not have exceeded 30 per cent for PMS driven vehicles.

For diesel-powered vehicles, it shouldn’t affect transportation fare significantly because there was no increase in the price of diesel. But the experience was that transport fare went up significantly. We then computed the impact of the access to the mass transit-revolving loan at zero percent. If you compare that to getting a commercial loan of about 18-21 per cent, that immediately brings the price down. And when we computed it, the price is supposed to be the same or lower than the pre-removal of subsidy, which was what the president directed us to work towards.

Aganga noted that, owing to incentives provided by the Federal Government to transport operators, they (transport operators) had agreed to reduce the cost of transportation by at least 20 per cent. “I am delighted that the NURTW, NARTO and other transporters agreed that if we are able to make that loan available to them on those terms, they will charge 20 per cent less than what they charged before subsidy was removed.

Unfortunately, we were able to put it to work immediately because of the strike. But I am delighted to say that few days ago, the scheme started operating in Abuja. And the routes we went to, pre-subsidy removal they were charging N100 for that route but post subsidy removal they were charging between N150 and N200.

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