THE DETERMINANTS OF URBAN PUBLIC TRANSPORT SERVICE PRICING IN GHANA- A CASE STUDY OF THE KUMASI METROPOLITAN AREA

The primary fonction of transportation is to carry people and goods from an origin to a destination within the shortest possible time and at the least cost. Urban mass transport continues to be a high priority social obligation of governments throughout the world. In some jurisdictions, it is the prime responsibility of national governments, while in other localities it is a state or local government responsibility. Mass transport in developing countries is essential for the urban poor who have to rely on walking, cycling and road based public transport to meet most of their travel needs. The primary objective of sustainable public transport should be for pricing to generate sufficient revenues to ensure an adequate, efficient and continuing supply of public transport services. In many urban areas, transport services have been treated as public services or instruments of social policy. In such environments, prices rarely reflected the cost of provision of these services and focilities, as a result of which subsidies have been given, and strict commercial and management accounts have often not been maintained. A clear distinction needs to be made, however, between keeping costs low (and hence allowing prices to be low even where costs are fully covered) and keeping prices lower than costs (the issue of subsidies).

In Ghana, pricing of road transport carrier services especially in the private sector has been a persistent problem for all the stakeholders in the transport sector and characterised by indiscriminate fore increases. This phenomenon keeps reoccurring year after year suggesting that there is no way forward, especially when there are reviews in fuel prices. This indiscriminate pricing system always leads to other problems including high food prices, high inflation as well as instances of very nasty quarrels and violence between commercial drivers, their assistants and passengers at various lorry stations. There is also the problem of persistent strike actions by drivers demanding higher fores, which the government and passengers often resist. The reason has been that, the urban mass transport services serve most people in the urban areas; especially, the low and middle
income earners. This group of people consider this form of transport mode as the only affordable means of commuting. This goes a long way to affect productivity since most workers use these means to get to their work places. There ought to be a more rational and objective system of determining the impact of the review of fuel prices on urban transport fares which should serve as a basis for Government to negotiate new fores with the unions following review of prices of petroleum products. In doing this, research questions such as: what factors affect the cost of operating urban mass transportation services?, What pricing mode! should be used to price urban mass transport services in Ghana?, And what policy options would enhance sustainable pricing and provision of urban mass transport services in Ghana? were discussed with the aim of finding relevant answers to them.

On the basis of the above research questions, the major objective of the study was to develop a model with which prices of urban transport services can be determined following review of prices of petroleum products. The specific objectives of this study were to identify the factors which affect the cost of operating urban transport services; to investigate how the interests of the various stakeholders in the urban transport industry can be harmonized through pricing; and to identify policy options that may be considered in the pricing of urban mass transportation services. Data for the study were derived from two main categories; Primary and Secondary sources. Primary data were gathered from the field through the use of questionnaires, observations and interviews while secondary data were gathered from secondary sources such as books, newspapers, journals, and Internet; among others.
From the review of literature, it was found that, the factors that affect the demand for urban transport services are transport fores, trip duration, population of the community, income of household/commuters, employment status of the inhabitants, access level and the vehicle kilometres operated. However, from the field data analysis, it was found that, the factors that affect the demand for urban public transport services in Ghana are population size, fare levels, trip duration and employment status. Population is the most significant factor that affects the demand for urban transport services. This is supported by the fact that it contributes about 57.3 percent of the total variation in the demand for urban transport services in Kumasi. Trip duration cornes next, contributing about 10 percent to the total variability in demand. This is the time a passenger takes to undertake a
journey from an origin to a destination. It involves the titne the passenger spends in waiting for a vehicle, boarding time, joumey time and walking time, if applicable. Transport fare and employment status contribute 6.1 and 1.6 percent respectively to the overall demand of urban transport services in the study area.

Review of literature further shows that, the factors that affect the cost of providing urban transport services are tyre cost, insurance cost, fuel cost, trip length, overhead cost, hours worked, lubricant cost and cost of spare parts and maintenance. However, from the analysis of field data, it was found that, seven factors affect the cost of providing urban public transport services in Kumasi. They are tyre cost, fuel cost, trip length, overhead cost; hours worked, lubricant cost and cost of spare parts and maintenance excluding insurance cost. Tyre cost is the most significant factor that affects the cost of providing urban transport services in Kumasi and is shown by the fact that, it contributes about 40.4 percent of the total variation in the cost of providing urban transport services in Kumasi. Fuel, the thorniest issue within the industry, contributes about 31.9 percent to the cost of providing urban transport services in Kumasi. Overhead cost cornes next, contributing about 14.9 percent to the total variability in the cost fonction. Trip length contributes about 5.1 percent to the total cost of providing urban transport services in Kumasi. Hours worked, which is the actual number of hours the vehicles are operated, including time spent loading, unloading and refuelling; lubricant cost, spare parts/maintenance cost contributed 0.3 percent, 0.6 percent and 2.0 percent respectively.
The cost mode! which was derived after the analysis of field data is aimed at estimating the cost of providing urban transport services in Kumasi. This model can be used to estimate the cost to be incurred in providing urban transport services which is critical to the overall supply fonction in Kumasi and in pricing of transport services. From the analysis, it was revealed that, there was a reasonably strong relationship between number of vehicular trips as a dependent variable and the following independent variables: cost of vehicle, demand for transport services, number of vehicles available and profit level as independent variables. The most dominant factor was the cost of the vehicles used in the provision of the service. From the analysis, it was revealed that, cost of vehicle contributed about 4 7. 7 percent to the overall suppl y situation within the urban transport industry. This implies that, for prospective investors, the cost of the vehicle was the most important decision criterion. The next factor was the demand for the service. Demand for the service contributed about 17 .1 percent to the total variation in the suppl y of vehicles in the urban transport industry. This was followed by the total number of vehicles operating within the industry, contributing about 16.5 percent. The final factor was profit levels which contributed 2.2 percent to the overall variance in the supply of urban transport services in the study area. Having determined the factors affecting demand, cost and supply of urban transport services, the study also established the factors which influence passengers' willingness to pay for the service. Four variables namely service level, sex of passengers', employment status and household size are the key determinants of passengers' willingness to pay for urban transport services.

Based on the various interest highlighted, it was found that, the main pricing technique needed to harmonize these interests of the stakeholders within the urban transport industry was a combined pricing strategy which uses the cost of providing the service, demand for the service and the competitive factors within the industry as the basis for pricing. It can therefore be argued that, based on the various interests of stakeholders, the appropriate pricing model that should be used in pricing within the urban transport industry in the study area should be a model that considers the cost factors (such as fuel cost, insurance cost, spare parts and maintenance cost, insurance cost, lubricant cost, tyre cost and overhead cost) in providing urban transport services as well as the demand factors (such as population, incarne of household, employment status, access level and vehicle kilometres operated) that also influence the demand for urban transport services. In addition, the competitive factor that is manifested in the supply level should be factored into the pricing mode!. By using this approach, the various interests of the stakeholders will be harmonized; hence, reducing the possibilities of conflicts among them.

The study is expected to add to existing knowledge and understanding in the field of urban transport service operations and pricing which is a crucial component of the urban transportation policy. During the course of the study, several areas of research were identified. Sorne of them include how the use of new vehicles help reduce vehicle operating costs (VOCs) and subsequently make urban transport service affordable and the prospect of empowering District Assemblies (DAs) to license, regulate and monitor vehicle operators under their jurisdiction.