Fortune News | Dec 25,2021
A law prescribing satellite tracking devices be installed on vehicles engaged in mass transportation is in the making, designed to manage the enforcement of the federal government's impending petroleum subsidy phase-out.
In January this year, the Council of Ministers approved a regulation that proposes fuel subsidies for privately-owned vehicles be lifted progressively within a year, beginning July. Public transport vehicles would see the subsidies reduced by 10pc bi-annually over a five-year period. The remaining vehicle owners will have to carry the full weight of global prices by July 2023. The Ministry is mandated to compile data on vehicles entitled to benefit from subsidies for five years.
Officials at the Ministry hope that GPS satellite tracking devices allow them access to real-time information on vehicles' locations, routes, and speeds. The devices can also monitor most sensors on a vehicle, such as those measuring fuel consumption and accident detection. However, the number of vehicles required to install the GPS is unknown, according to Yohannes Beshawork, coordinator of a committee tasked to oversee the fuel subsidy lift-off.
Headed by Bero Hassan, a state minister for Transport & Logistics, the committee comprises representatives from the Ministry of Trade & Regional Integration, the Petroleum Products Supply & Distribution Regulatory Authority, and regional transport bureaus.
Data obtained from the Addis Abeba Transport Bureau shows that 10,131 mass transport vehicles provide services in the capital. They are part of the over 1.3 million registered vehicles on the country's roads.
Officials say concerns over potential illicit trade in petroleum products due to the dual-rate system to be introduced at pumping stations later this year are the motive behind the tracking systems.
“It aims to monitor those vehicles' activities to receive the subsidies,” Yohannes said. “This includes daily and monthly fuel consumption.”
However, the requirement does not apply to three-wheel rickshaws (commonly referred to as bajaj). Data from the defunct Federal Transport Authority shows that close to 30pc of all registered vehicles are rickshaws or motorcycles.
The regulation passed by the Council of Ministers three months ago includes ride-hailing service providers in the quarterly fuel price adjustment of 25pc beginning July. There are over 10,000 vehicles engaged in ride-hailing services.
Some public transporters do not welcome the lifting of fuel subsidies, claiming that it will add to the already skyrocketing prices.
“Even if it is gradual, the lifting of the subsidies will increase our cost of operation,” said Berhane Zeru, board member of Hidassie Cross-country Transport Plc.
Established in 2011, the transport company provides cross-country travel services with 100 buses.
Increasing fuel prices in the international market have put pressure on the federal government’s budget. Fluctuations in international oil prices are causing a mounting deficit in the Fuel Price Stabilisation Fund established to absorb price shocks from the international market. The deficit has reached 102 billion Br.
Initially, the Ministry planned to identify the number of vehicles required to install GPS before March 19, 2022. However, the deadline has been pushed further. Last month, the Ministry communicated its intentions to close to 50 GPS tracking device suppliers.
Industry players have welcomed the move with mixed feelings.
Solomon Kassa, general manager of Kassa Software Tracking Plc, says the requirement will open new business opportunities for suppliers, although it would be an added spending for owners and operators. GPS tracking devices can cost anywhere between 17,000 Br to 25,000 Br apiece.
“We should be part of the process to avoid the challenges faced in the past two years,” said Solomon.
The company was at the forefront after the Customs Commission introduced a law that mandates the installation of GPS systems by all cargo trucks three years ago.
Over the past two years, the company has installed GPS integrated speed limiters and GPS fleet management systems on close to 2,000 vehicles. Incorporated eight years ago with an initial capital of 1.2 million Br, Kassa Software imports the devices from China and India.
Other suppliers oppose the Ministry's move, claiming they were not consulted.
“The Ministry shouldn't prepare the specifications for the new requirement on its own,” said a manager of a company that has been in business for a decade.
Federal authorities should review the effectiveness of similar devices installed previously before enforcing the new rules, according to the Manager. He refers to a mandatory requirement imposed three years ago, forcing vehicles imported into the country to install speed limiter devices. The requirement does not apply to vehicles already registered.
Due to what officials call “corrupt practices and administrative problems," the Ministry suspended the requirement last year. However, the owners of newly-imported vehicles must install speed limiter devices upon official request.
A transport management expert who requested anonymity argues that although it is possible to monitor and manage fleets by installing GPS devices, efficiency is an issue in Ethiopia, where there is low connectivity.
“The poor connectivity limits the system's ability to provide real-time data," said the expert.
However, the expert concedes the new requirement can reduce the misuse of petroleum products while the government lifts the subsidies gradually.
“Establishing a central database and surveillance centre is essential to get the most out of the system," said the expert.
The manager of the company that supplies GPS tracking devices agrees.
“Implementing the requirement under the existing manual system is impossible,” he said. “The lack of technical know-how will have an impact on applicability."
Berhane of Hidassie Transport recommends the quality of the devices available in the country be checked.
“An autonomous body that oversees the implementation should be established first,” said Berhane.
PUBLISHED ON Apr 02,2022 [ VOL 23 , NO 1144]
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