Why don’t public transport fares drop with fuel prices?

As a rule, steadily decreasing fuel prices result in decreased public transportation fees. With this considered, bus fare in Georgia cannot be more than 40 tetri, while minibus fare should not exceed 60-65 tetri.

Despite fuel prices steadily dropping globally, the price of different fuels in Georgia has fallen only by 15-20 percent; however, even in the present state of affairs, public transport fees could allegedly be reduced.

As the City Hall’s Traffic Division claims, they cannot reduce bus fares, since the price of oil can easily skyrocket again.

The leadership of LTD “Tbilisi Microbus” shares this position as well; as head of its press service informed us, they don’t plan to cut bus fares.

As Assembly minority member and representative of United Democrats, Shalva Obgaidze states, nothing has changed for the better in Georgia’s fuel market under the present authorities. In his words, not even a single new player has emerged in our market since then and this makes our people think that some cartel deals are being made between different companies.

“As a rule, when the price of fuel increases around the world, it is the same in Georgia as well; however, when the price of fuel falls around the world, here it remains the same. Oddly enough, our experts as well as representatives of different NGOs define this as something positive. According to them, nothing is bad about the decision to reduce fuel prices by only 15-20 percent when the price of one barrel of fuel has dropped by 55 percent on the world market.

Let’s bring up the example of minibuses; as you know, their drivers are contracted by a minibus company. This is precisely the reason why minibus fares have not decreased in Georgia,”- claims Mr. Obgaidze.

According to him, under the former government, minibus drivers were forced to pay high taxes to the company that reducing fares was out of question.

This is the reason why Shalva Obgaidze calls the drivers hostages of their companies and claims that Tbilisi City Hall’s Transportation Department must deal with the issue. “If drivers’ taxes are not reduced, public transportation fees will obviously remain the same,”- states the Assembly deputy.

As economics expert Zviad Kandelaki maintains, the price of oil and its products have decreased globally and generally this results in cheaper services and production, - he claims.

“Fuel price is what establishes tariffs. Considering this, public transportation fees must be reduced. This is obvious – when wholesale cost of this or that product falls, its retail cost also decreases. On this particular occasion, “Tbilisi Micro Bus” Company pays a wholesale fuel price, while a passenger pays the retail price.

In Georgia, passengers pay extremely high transportation fees since we do not have an e-ticketing system, which is convenient for all passengers, enabling them to enjoy cheap public transport.

However, Georgians don’t have this possibility and are forced to pay downright obscene fees. By all rights, public transport fees should decrease along with the price of fuel, which is steadily falling around the world. In other words, if fuel price is reduced by 30-40 percent, public transportation fees must be cut by at least 25-30 percent,”- claims Kandelaki.