FORMULATION OF POLICY FRAMEWORK FOR POVERTY ALLEVIATION: TRANSPORTATION

Transcription

1 FORMULATION OF POLIY FRAMEWORK FOR POVERTY ALLEVIATION: TRANSPORTATION Report Submitted to UNDP olombo Amal S. Kumarage, Dept. of ivil Engineering, University of Moratuwa, Sri Lanka. October, 1998

2 TABLE OF ONTENTS 1. INTRODUTION Rationale Methodology and Limitations onceptual Issues in Transport and Impact on the Poor Availability of Transport Affordability of Transport Safety in Transport for the Poor Mobility of Women Employment RITIAL ISSUES IN TRANSPORT & POSSIBLE SOLUTIONS Transport Infrastructure Road Sector Railways Transport Services Bus Transport Services Goods Transport Pricing of Transport Low Fares in Public Transport Unregulated Fares in Higher Quality Bus Transport Subsidies and Financial Assistance for Transport for the Poor Price of Fuel Taxing of Vehicles Promotion of Low ost Vehicles Bicycles Three Wheelers Non-onventional Vehicles Safety in Transport for the Poor Highway Design & Maintenance Maintenance of Pedestrian Facilities Safety in Public Transport ompensation Transport Requirements of Women Employment Generation Employment in Rural Road onstruction & Maintenance Training in Vehicle Operating Skills ONLUSIONS... 28

3 LIST OF TABLES Table 1 Non Motorised Users among Fatal and Injury Accidents... 4 Table 2 Sri Lanka=s Road Network Density (Province Density)... 8 Table 3 omparison of Productivity & Performance of Private Buses Vs. PTS Table 4 omparison of ost Passenger arriage by Private and State Sector (RTs) LIST OF FIGURES Figure 1 Transport Affordability Pyramid... 3 Figure 2 Growth of Road Length & Vehicle Stock... 6 Figure 3 Access - Hierarchy Between Urban enters... 9 Figure 4 Road Network Proposed for olombo Metropolitan Region Figure 5 Proposed Limited Access Highway Network Figure 6 Growth in Bus Travel Figure 7 Bus ost and Fares ( ) Figure 8 New Bus Additions & Load Factors Figure 9 ost of Petrol & Diesel ( )... 24

4 PREFAE This paper is prepared for the joint UNDP-World Bank Project on Formulation of Policy Framework for Poverty Alleviation, It comprises a brief description of the transport issues relating to poverty alleviation in Sri Lanka. It is a summary of the authors= paper titled >Transport & Poverty Alleviation in Sri Lanka= (Kumarage, 1998). A comprehensive literature review is also to be found in the afore mentioned paper. AKNOWLEDGMENTS Assistance from UNDP under Service ontract No: S 98/43 is gratefully acknowledged. The paper has been enriched by the presentations and discussions of participants at the seminars of the Poverty Alleviation Project. omments and contributions made by members of the Technical ommittee and in particular, Dr. Harsha Athurupana together with editorial assistance from Ms. Premala de Mel are also gratefully acknowledged.

5 Executive Summary EXEUTIVE SUMMARY The strategy for transport from a poverty alleviation perspective should essentially have a dual focus. On the one hand, it should attempt at providing the infrastructure and services necessary to sustain a rapid economic growth over the short term. On the other hand, it should provide adequate protection to the poor who should not be deprived from access to essential services or employment opportunities or be exposed to new and increased dangers arising from the provision of increased transport services. Such a >bi-focal= strategy within the dual objectives of economic growth and social equity, is considered to be the most balanced and progressive policy framework that could be recommended for poverty alleviation in Sri Lanka. This paper in chapter 1, identifies and examines a number of conceptual issues in the transport sector which are considered to present significant obstacles to efforts taken towards poverty alleviation in Sri Lanka. It examines several pro-poor policies that have been pursed since independence and their effectiveness and relevance today. The issues of availability of transport infrastructure & services, its affordability for the poor have been discussed together with potential for employment in the transport sector. A discussion is also found on specific problems of safety encountered by the poor. Special consideration is given to discussion of the transport needs of women. In chapter 2, the paper identifies and formulates a number of critical issues, each of which are discussed in the background of the wider conceptual issues regarding transport and the poor. The issues within each of the sub sectors of transport such as roads, railways, bus transport, goods transport have been dealt with separately. The issues of pricing and taxation, safety and employment where they present as obstacles to poverty alleviation have also been discussed. In its conclusions, the paper lists these critical issues and suggests possible solutions and mitigatory actions for each of them. This list could then provide a basis for further considerations in terms of policy formulation and project formulation that could be considered together with initiatives for poverty alleviation in Sri Lanka.

6 Introduction HAPTER ONE: INTRODUTION Sri Lanka=s modern day internal transport is mostly provided by road and rail. The origins of both these networks date back to the period of colonial occupation. The rail and road networks in eylon, as it was known then, as it was in most other countries of colonial occupation, were primarily created for the purpose of exporting produce. olombo being the principal port city, had a network of roads and railways radiating from it to all other parts of the country. Export of tea produced in the hill country, rubber in Sabaragamuwa and coconut in the coastal areas was the primary rationale for the extension of the rail network in the late 19th century and early part of the 20th century. It could be stated that the rail and road networks in the pre-independence era (prior to 1948), were developed under an export-oriented policy and paved the way for national and regional economic growth of that period. Since independence, Sri Lanka=s implicit >transport policy= has been directed towards (a) the promotion of rural accessibility by providing new roads and new bus services and (b) maintaining low fares in public transport. In contrast to the early developments, these efforts in the post-independent era were more welfare-oriented and less concentrated on economic growth. Goods transport which is dominated by road haulage, has been largely in the hands of the private sector, after early attempts at protecting the carriage of certain items of produce by the railways. Public transport which had been exclusively with the private sector prior to independence, has seen various forms of State undertakings as well as private sector participation since then. Private transport is provided by a vehicle fleet of nearly 1 million motorised vehicles made up of two, three and four wheelers and a further estimated 2 million bicycles. Para transport is unregulated and provided by mostly the informal sector in the form of three wheeler taxis, school and office transport services. 1.1 Rationale The transport sector in its present form could be identified as one of the primary constraints preventing rapid economic growth in Sri Lanka. The absence of high mobility inter-regional transport, the deteriorating quality of public transport and the increasing road congestion are some of the problem areas identified as critical issues. The >do-nothing= scenario for the transport sector is anticipated to have had a significantly retarding effect on the growth of the economy as both transport infrastructure and delivery services are lag behind other sectors such as telecommunications and power. The most severely impacted from such a scenario would be the poor, who would be increasingly isolated from opportunities of employment, access to essential services as a result of deteriorating transport services and poor quality roads. The vision for transport development from a poverty alleviation perspective is considered to 1

7 Introduction require a dual focus. On the one hand, it should attempt to provide the infrastructure and services necessary to sustain rapid economic growth over the short term. On the other hand, it should provide adequate protection to the poor who should not be deprived from essential access or employment opportunities, or be exposed to new and increasing dangers arising from the provision of increased transport services. Such a >bi-focal= vision is considered in this paper to be the most balanced and progressive policy framework for poverty alleviation within the dual objectives of economic growth and social equity. 1.2 Methodology and Limitations The paper is based on analysis of published data on the transport sector in Sri Lanka and a number of research publications referred to in for poverty alleviation. increased availability, increased affordability, detail in >Transport & Poverty greater safety, Alleviation in Sri Lanka= (Kumarage, improved mobility for women 1998a). Most of the data available is and aggregate except for a limited amount greater employment generation. of data from the Household Expenditure Surveys. Since, reliable desegregate data would only be available from the Integrated Survey to be undertaken next year, this paper bases its findings on the data reported in the annual reports and macro statistics on the performance of the transport sector. The analysis is focused on areas of the transport sector issues (Box 1) which directly and indirectly impact the conditions of the poor in Sri Lanka. These are identified on the basis of critical requirements of mobility and accessibility that affect and prevent the poor from improving their circumstances. 1.3 onceptual Issues in Transport and Impact on the Poor Availability of Transport Issues in a transport sector Box 1: development strategy Availability of transport is essential for the poor. It is likely that they may not have access to other forms of speedy communication such as telephones. The objective of ensuring reasonable availability of transport infrastructure has the following benefits for the poor: improves access to information on job opportunities and relief assistance programs, facilitates access to jobs outside the community. improves access to raw materials and markets and thereby reduces the cost of transport for both the input and output, so that the product of the labours of the poor are more competitive, 2

8 Introduction improves land values, (particularly in remote areas) as the productivity and profitability increases, improves the value of human resources in remote communities, improves access to health education and technology and improves access to educational and health facilities. The availability of transport has two basic dimensions. The first is the requirement for transport infrastructure. This would mean the provision of different types (quality) of roads and railways. The second would be the requirement for a transport delivery service. This would include public transport services, goods transport and private vehicles and other matters related to their operation Affordability of Transport The concept of affordability of transport has two basic determinants. On the one hand, it could be interpreted in terms of social equity, where it could be held that basic transport facilities should be available to the entire cross section of the population, in order to use an affordable mode of transport. On the other hand, is the argument that investment in transport infrastructure and services should be made providing affordable access to jobs, markets and services for all income groups, such that their participation in the economic process of the country is not marginalised. The cost of transport, is usually related to the cost of investment of the vehicle. A bicycle, which needs a lower initial capital will cost less per km than a motor cycle, which is more costly to own and operate. Thus, the poor cannot be expected to own costly vehicles and hence be captive to either public transport or nonmotorised transport vehicles for their daily necessities of mobility of persons and goods. A typical distribution of the affordability by transport modes for households in Sri Lanka is given in Figure 1. This clearly identifies pedestrians, bicycles (and other nonmotorised means such as carts) and buses/trains as the affordable modes of transport for the lowest 20% of the income groups. The affordability of travel then needs to be discussed in terms of the cost of public transport and the price of low cost private transport. The percentage of household expenditure on transport (and communications) has increased from 3

9 Introduction 5.0% in 1980/81 to 6.1% in 1995/96. This indicates the possible increases in mobility as well as the increasing use of superior modes of travel. However, these hypothesis needs to be examined with the possibility of increasing the real cost of transport Safety in Transport for the Poor A distressing aspect of transport in Sri Lanka is that it has become increasingly unsafe for the poor. As passengers in public transport, the high load factors and scant enforcement of road worthiness of vehicles has resulted in many passengers especially those captive to bus transport having to take excessive risks when travelling. The question of safety also arises in the design of roads. When space for right of way on roads is limited, there has been a tendency in past years, that more space is provided for motorised transport whenever roads are rehabilitated or widened, but very often at the expense of a reduction of space for pedestrians. The alarming feature of this has been the foreign funded rehabilitation of National Highways of which around 600 kms have been completed. In all these cases, the donor agencies have refused to acquire the additional right of way required for pedestrian facilities. The highway designers have thus paved almost the entire exiting right of way, thus leaving little space for pedestrians. Although, not analysed as yet, the accidents on these roads are reported to have increased several fold, with the highest incidents being amongst pedestrians and cyclists. ategory Fatal Number of Accidents 1992 Grievous Injury (% of all accidents) Non-Grievous Injury Total Accidents Pedestrian 528 (33%) 842 (35%) 4,782 (38%) 8,618 (23%) yclist 231 (15%) 251 (10%) 1,862 (15%) 3,480 (9%) All ategories 1,577 2,395 12,580 37,495 Table 1: Non-motorised Users among Fatal and Injury Accidents It is seen from Table 1 that between 50-60% of all fatal or injury accidents involve a pedestrian or cyclist. This proportion is high and adds to over 7,000 people being injured, over 1,000 grievously injured and a further 750 killed. It is essential that safety precautions for pedestrians, cyclists and public transport passengers should be improved. Without adequate safety, there is a reluctance to travel. This is important, since in the event of an accident, wherein serious injury or death occurs, it is rarely that the poor are adequately compensated. Moreover, the loss of a breadwinner causes severe hardship to poor families. 4

10 Introduction Mobility of Women A preliminary survey of rural transport in Sri Lanka (RDS, 1993) has revealed that domestic travel which is mostly undertaken by women on foot, is mainly for the purpose of transporting water, followed by trips to the mill, local market and for the collection of firewood. A woman in the dry zone spends an average of 49 hours per week on domestic travel. Presently, it is reported that the female participation rate in the work force is 32% and unemployment 16%. It is believed that among the primary reasons for the poor-participation of women in the work force and the high unemployment amongst them, are the difficulties faced with regard to travel. This is acute amongst the poor, where the women spend a significant proportion of their time attending to domestic chores. Greater mobility amongst women would to improve their living conditions considerably. onservative attitudes regarding the mobility of women have led to a lack of skills development in bicycle riding amongst poorer women in most parts of the country, thus preventing them from a speedier form of low cost transport. The position of women in public transport has also been of much concern in recent times. The lack of discipline of bus crews and the high over-loading factor have caused distress to women owing to incidents of sexual harassment Employment Opportunities One of the positive outcomes of providing mobility and access needs for people, is the employment opportunities that could arise from the construction and maintenance of the transport infrastructure and the operation of transport services. Sri Lanka which has high unemployment requires to consider the potential employment generation, while considering transport sector development. This is important since (a) different modes of transport require different intensities of labour and (b) the skills level of the employment required for different modes are varied. It is estimated that there are nearly 500,000 persons in direct employment in the transport sector. 5

11 ritical Issues & Solutions HAPTER TWO : RITIAL ISSUES IN TRANSPORT & POSSIBLE SOLUTIONS 2.1 Transport Infrastructure The growth of the physical infrastructure has to keep pace with the growth of the economy. In the case of the internal transport infrastructure, this would include roads and railways Road Sector Extensive road building after independence was primarily aimed at providing access to rural and resettlement areas. As shown in Figure 2, there has been sustained growth of around 3.4% p.a. in the lower order roads (lasses, D & E) at the expense of virtual stagnation of the top order road hierarchy, where the A & B lass road length grew only at 1.3% p.a. When compared to average GDP growth of 5.1% p.a. and vehicle stock growth of 6.8% p.a., clearly the roads at the top end of the hierarchy have had insufficient Growth of Road Length & Vehicle Stock ( 1959 Base = 100 ) growth. This 1200 clearly indicates 1000 the policy of providing 800 extensive rural A & B Roads (km) road systems, Other Roads (km) 600 Vehicle Stock which were seen GDP in constant Rs. more in terms of 400 welfare measure for rural and 200 remote 0 communities as opposed to Year specific economic growth strategies. While this policy achieved most of the desired objectives of providing rural accessability and associated improvements in the quality of life, it has effectively prevented the construction of modern limited access roads between urban centers and improved traffic management systems within urban centres. 6

12 ritical Issues & Solutions An analysis of the present road network is given in Table 2. It can be seen that the ratio of A lass to E lass road length is 1: 15. This clearly shows a substantial density of rural access. While specific deficiencies still do exist at the lower end of the road hierarchy, the most significant inadequacies are at the top end with the absence of a network of high mobility roads. Table 2 also very clearly indicates that there are no major geographic imbalances in road densities. When density is measured in terms of road kms per sq km of land area, the Western, entral, Southern and North Western Provinces have a road density significantly higher than the national average. By the same measure, the North & Eastern and Uva Provinces have an average less than the national density. On the other hand, when density is measured in terms of road kms per 1000 population, then the Western and Southern Provinces are below the national average, while North entral and Uva have higher average values. It is generally perceived that high road density will lead to higher economic growth. It has however been observed by Antle (1983) that >the road density does not have a clear-cut association with per capita income nor economic growth rates in Asia. This reinforces the idea that it is not the level of resource endowment, but rather the utilisation of infrastructure resources which determines the economic impact=. This is typically a correct prognosis of the conditions in Sri Lanka, where the density of roads at over 1.5 kms per sq km of land area is very high compared to standards of even developed countries. It is therefore difficult to support a wide spread campaign for more roads. As shown in Table 2, even on provincial distribution, only one province has an overall road density of less than 1 km per sq km. The high road densities however, leads us to the interesting question as given the availability of substantial road infrastructure, why has economic growth not followed despite heavy investment in roads. This is attributed to three primary reasons. Firstly, the high road density particularly at the lower end has caused severe budget constraints in maintenance of all roads. Secondly, there are incessant political pressures even at present, brought on highway authorities to construct and maintain new roads every year. Although no exact figures are available, it is estimated that at least 1,000 kms of new road length is added to the network of rural roads each year. This leaves even less funding for proper maintenance of the existing network. Thirdly, there is the problem of the lack of expansion of roads at the top of the hierarchy, particularly with respect to qualitatively better limited access roads such as motorways and expressways for inter-regional traffic and traffic management measures in urban areas. 7

13 ritical Issues & Solutions lass of Road A B D E Municipal Total Primary Function 1 <--> 2 2 <--> 3 3 <--> 4 4 <--> 5 Rural Secondary Function 2 <--> 2 3 <--> 3 4 <--> 4 5 <--> 5 Road Length (kms) Western Province entral Province Southern Province North & Eastern Provinces North Western Province North entral Province Uva Province Sabaragamuwa Province TOTAL % Paved 100% 100% 73% n/a n/a n/a Road Density (km/sq km) Western Province entral Province Southern Province North & Eastern Provinces North Western Province North entral Province Uva Province Sabaragamuwa Province TOTAL Road Density (km/1000 population) Western Province entral Province Southern Province North & Eastern Provinces North Western Province North entral Province Uva Province Sabaragamuwa Province Total Ke y Significantly higher than national average Significantly lower than national average Table 2: Sri Lanka=s Road Network Density (Province Density) 8

14 ritical Issues & Solutions This problem constitutes a significant bottleneck in Sri Lanka=s economic development. Possible solutions to this could be discussed as follows; A lass GALLE OLOMBO MATARA 1 st Order entre 2 nd Order entre Road Master plan B lass In order to sustain the entire road network, Sri Lanka should have a policy of developing its roads as a network. In this lass respect, such a hierarchy should be based on their role within the TANGALLE HAKMANA economy. Such a policy should MIDDENIYA WEERAKETIYA entre be based on holistic regional development strategies and in particular provide good rural D/E lass and urban linkages. This is vital for improving incomes in BELIGALGODELLA MEDAGAMA the rural areas, particularly with respect to marketing of produce of small industries, from agriculture, where large price fluctuations occur unless appropriate markets can be accessed within the hierarchy of centres. 3 rd Order 4 th Order 5 th Order As shown in Figure 3, such a policy should be based on an access hierarchy whereby each urban centre is connected to at least one urban centre of a larger magnitude. It is proposed that new road construction and maintenance of funding should be carried out in this criterion whereby roads between centres of different orders (diagonal arrows) are given preference over roads connecting centres of the same order (horizontal arrows). Road Maintenance Fund A case is also made for a Road Maintenance Fund (World Bank, 1997), which would have designated funds for road maintenance, in order that a continuous and adequate flow of funds for road maintenance could be made available, rather than having funds for maintenance which compete with the more popular spending of new roads, particularly for increasing rural access furthermore. entre entre Limited Access Highways (Motorways) A basic network of around 600~800 kms of such a road network (Figure 4) is shown to be 9

15 ritical Issues & Solutions necessary for Sri Lanka=s immediate requirements (Kumarage, 1998b). For a systematic regional development strategy, this network should be centered around the Western Province where most industries are located and extended to the rest of the country within a 15 year period at the most. However, such a system of roads should be based on overall development strategies. Such an approach for the olombo Metropolitan Region. (Figure 5) led to the North South Expressway being proposed by the Urban Development Authority, (1998 ). However, The olombo Katunayake Expressway and the Southern Highway are presently being studied as highway projects in isolation of each other and devoid of a national road Masterplan based on providing the necessary linkages. This will only increase the cost of transport resulting from longer travel distances and increase in congestion arising from poor placements of high traffic generators. This in turn would be an impediment to the desired objective of rapid economic growth. Improved Rural & Estate Roads, Trails & Bridges It is recognised that there are many communities in Sri Lanka both in the rural and estate sectors, where adequately motorable access is still not available. While, the provision of roads to such communities should be considered as being important, it should fall within a planned and sustainable strategy as discussed below.. (1). Rural Roads New rural roads are usually justified on the basis that they provide access to remote communities that would otherwise be served only by footpaths. In rural areas, a walking distances of upto 3 or 4 kms is not considered excessive. However, this restricts the movement of goods, as well as the transport of the sick and elderly. If a public road is to be provided for each such community, the road network would be further unmanageable. Given the fact that Sri Lanka=s rural road network is not severely deficient in extent, its further expansion would have to be based on a strictly rational basis. (2). Policy for New Rural Roads Such a policy should be based on a comprehensive survey of transport availability to all communities, by the size of the community and distance to the nearest available road (or rail). This should be made the criteria for providing new rural roads. It would also be useful to know what resources are required for such roads. In most instances, this may be the requirement of a single bridge or culvert. The urgency of such a policy cannot be over emphasized, as Sri Lanka has to continue in supporting an unsustainable length of roadways even at present. Moreover, at present at least Rs mn appears to be spent on new rural roads each year, with no appreciable improvement in access or mobility to the rural sector. (3). Type of Rural Roads Required 10

16 ritical Issues & Solutions In the interest of providing technically appropriate rural roads, sustainability is not usually considered an important feature. A metalled and tarred (paved) road surface is often considered as an all-weather road by rural communities (and their political representatives). Most politicians and villagers aspire to have one such road in their community. Such roads are, expensive to maintain as they susceptible to extensive damage as a result of inclement weather. For example, a number of estate and rural roads once paved are now in poor condition due to high costs of maintenance. A program to popularise sustainable all weather gravel roads or compacted earth roads is required. Research on improving gravel roads, forms of soil stabilisation and drainage methods are urgent needs hitherto not given much consideration in Sri Lanka. Similar research on crossing structures would be useful. (4). Rural Pathways & Bridges Sri Lanka has an unspecified but dense network of non-motorable pathways. These provide access to isolated communities and are generally not maintained by any institution. The users themselves are expected to maintain the roads, except in the crossing of waterways where bridges would be constructed by the respective local authority. Poor route planning of such paths aggravate the situation as a stream or river may be crossed several times. Wooden, steel and a few suspension bridges are used on such pathways. A program to improve such pathways and bridges is recommended. This would be similar to an ILO program in Tanzania, which has studied the usage of such pathways and provided technical details for improvements Railways The railways, which was given protection in the early years has since then, never had its position within a competitive multi-modal transport system adequately defined. This state of uncertainty for the railways has seen the track neglected and rolling stock depleted. Unlike roads which had growth in the post-independence era, the railways had retracted track and even lost its operational strength in rolling stock. It is presently in poor shape to meet the challenges of providing a viable service to meet modern transport needs. 11

17 ritical Issues & Solutions Presently, the railway recovers between 20-25% of its total costs from fares. The poor return is largely due to the under utilisation of track capacity and the shortage of rolling stock, which keeps the fixed costs high, and deprives the opportunity of increasing more revenue. The State as well as foreign donor agencies are however, reluctant to invest heavily on rail transport as its present performance is poor by any standard. Meanwhile, the State continues to support the railways with annual allocations of Rs 3 to 4 billion. This has of course been not dissimilar to the experience with the railways in many other countries. The railway=s role within the economy appears to be its service as a commuter mode particularly in the olombo Metropolitan Region. The railway also continues to play an increasing role in mitigating road congestion, particularly during peak periods. Its present financial status in its operations within this area are not know. However, it is anticipated that revenue should be at least 50% of costs. Given the fact that bus companies are also operating at a 30% loss, the efficiency of the railways within the Greater olombo area is adequately promising for further investment. The overall Traffic Management Policy (ND, 1998) for olombo, identifies the railway as the most important mode of transport for the development of this area within the next two decades. It has emphasized that the railway should be revitalized to carry upto 25% of the passenger share and upto 50% of the container movement in the olombo area by the year The revitalization of the railways will stimulate the urban economy, as well as provide affordable travel for the poor and mitigate a number of negative externalities. However, rail investment is usually extensive and should be directed only at projects which will increase its competitiveness, carriage of passengers and goods, particularly containers. 2.2 Transport Services Bus Transport Services Sri Lanka=s passenger transport services in the post-independence era, has for the most part centred around bus transport. By the end of the 1970s, per-capita bus usage increased rapidly due to Government policy of low fares and a technically efficient bus transport system (Figure 6). An important element in bus transport during this period was the Government=s emphasis to provide access to rural areas. In addition to the low fares, the Government subsidised student travel. It maintained a relatively high operating standard which was reliable, and an affordable passenger transport service was provided to many rural communities. This led to a high quality of rural life, with bus services at the time earning a reputation of being one of the factors that prevented large scale urbanisation in Sri Lanka. Bus services in Sri Lanka have been the most important provider of access to the poor, who have used buses extensively both for passenger travel, as well as for transport of homestead produce to 12

18 ritical Issues & Solutions market etc. It has provided mobility to the poor, who in most cases are entirely dependant on bus transport for all their mobility requirements. Growth in Bus Travel (per capita) Bus Kms per apita Pax Kms per apita Pax. kms per capita Bus Km. per capita Year 0 source : SLTB / NT & UoM alculations File : bus1.wk4 / Univ ersity of Moratuwa Bus transport, is presently served by over 8,000 buses operated by the State owned Regional Transport ompanies (RT) and a further 12,000 (mostly individual) private bus operators. Unlike the State buses, private bus operators do not receive any direct financial support from the State. While RT buses receive approximately 20% of costs in various forms of support, the private sector is unable to recoup sufficient revenue and keeps increasing passengers resulting in over crowding of buses and lowering all perceivable qualitative attributes of bus transport in order to survive. A discussion of the particular contributes of both State and private sector bus operations may be necessary in order to provide an improved bus service. Experiences of the State Sector in Bus Transport State control and the operation of bus transport worldwide, has developed a number of problems by the early 1970s. In Sri Lanka, the lack of a fares policy; political reluctance to increase fares relation to costs; political interference in non-policy issues; over staffing and trade union actions 13

19 ritical Issues & Solutions were the primary causes that led to the gradual deterioration of the State owned bus transport-the eylon Transport Board (TB). Although it continued to maintain high operational performances, the inability to (I) increase the fleet in keeping with demand, (ii) maintain reliability of services and (iii) manage the work force, were beginning to show the symptoms of an imminent breakdown of the bus transport system by Experiences of the Private Sector in Bus Transport By this time, the possibility of harnessing the private sector to provide public transport operations had been >re-discovered= in the UK and elsewhere. Sri Lanka followed making similar overtures by allowing private sector bus transport operations in However, the weakness in regulatory aspects of managing routing, scheduling and fleeting of buses led to most routes being over supplied, which in turn led to poor utilisation per bus (i.e. kms operated per day) and subsequent over-loading of the buses when operating (i.e. passengers per bus). artelization has occurred where private buses form a queue at the starting point and delay departure until a large number of passengers have boarded. In this manner, private bus owners on a particular route collude to constrain supply and avoid competition. The collusive practices leads to irregular and unpredictable departure times, congestion at terminals. The overloading enables the private operator to constrain supply to achieve profit objectives. The owners thereby earn greater profits than is socially optimal, while the quality and quantity of bus service received by the public is significantly reduced. On the other hand, private bus crews indulge in competition with regard to collection of passengers whilst on route. This further depreciates quality as buses race each other between stops and then linger at stops awaiting more passengers. Passengers attracted by a bus >waiting for departure= board into already crowded buses. These practices adopted by all operators further increase the social cost of the private bus service. Even if an operator wishes to provide a better service, the nature of the ordinary bus services disallows passengers to identify a particular operator with the quality of service. Moreover, their desire is to get into the first available bus. The only identifiable service is the one operated by the State. 1 The present State operations after twenty years of experimentation in >privatisation= (have only resulted in the continuing lowering of the industry standards of bus operations) have now formed into several Regional Transport ompanies (RTs), which are given a greater flexibility in management and motivation for increasing revenues 14

20 ritical Issues & Solutions A clear case of market failure has occurred, where the desired objectives of a cheaper and qualitatively better bus service by the private sector has not been realized. Instead, and in fact most unfortunately, all of the qualitative parameters of passenger travel have deteriorated after the re-entry of the private sector. Load factors (indicating crowding levels) have increased to an alarming and all time high of 150%, with daily vehicle utilisation plummeting to around 50% of that achieved during the TB era (Table 3). Unsafe driving, discourteous service, neglect of service during unremunerative times, lack of responsibility, reluctance to provide the first and last bus (usually not profitable), slower travel characterized by lingering at bus halts, poor road space utilisation due to competitive driving habits are some of the common complaints and symptoms of the failure of the free market in bus transport. In fact, by most measures, even in the most inefficient days the TB, appear to have given a more cost effective service to the public than the present service by the private sector. Performance Indicator Private (1997) State Performance of Private Sector Input Output Bus Productivity: Average Vehicle Utilisation (kms per day) Productivity of Employees 2 (Bus Place kms per employee per day) Overloading Load Factor Reported Accident Rate 3 (per mn bus kms driven) as % of 1997 as % of % 54% 1,078 1,394 1,271 77% 85% 150% 104% 69% 69% 46% % 53% Table 3: omparison of Productivity & Performance of Private Vs. State Buses By oligopolistic behaviour and by constraining supply, private buses operate below the socioeconomical optimum supply and quality levels. The hidden costs of private bus travel are higher than State buses. The following table shows that the cost of carriage of a passenger by the private sector at equal load factors is 15% more than the State sector. A speculative value of 35% could be placed as a cost differential when other social costs of private sector operations (accidents, loss of passenger time, fatigue etc.) are also considered. 2 Private Bus Employees have been assumed at 2 crew per bus plus 1 other for all other direct and indirect inputs such as maintenance, management, repairs etc. This figure was obtained from the Bus Operating ost Study (UoM, 1993). 3 From Police Statistics for

21 ritical Issues & Solutions RTs Private Remarks Revenue per Pax Km arried Rs 0.31 Rs 0.31 Private assumed equal to RTs ost per Pax Km Operated (at existing load factors) ost per Pax Km Operated (at equal load factors) Rs Rs 0.27 Assuming 15% profit for private at load factors of 103% for RT and 150% for private. Rs Rs 0.51 Assuming 15% profit for private at load factors of 80% for both RTs and private. Table 4: omparison of ost of Passenger arriage by Private and State Sector (RTs) Decline in Public Transport Services The reduction of financial support for public transport and the encouragement given to private enterprise in transport, coupled by the relaxation of regulatory control have led to transportation policies and investments, which focus heavily on encouraging motorization. Motor cars and motor cycles replace various forms of non-motorised travel and buses are replacing rail systems. This has put pressure on road capacity where the demand for road space, particularly in urban areas has far out stripped supply, leading to numerous negative externalities such as increased congestion and pollution. Regulation Poor and ineffective regulation of bus transport has been one of the reasons for the failure of the private sector to provide a qualitative service. For the successful delivery of passenger transport by the private sector, a number of essential attributes as shown in Box 2 do not exist in the private bus sector at the present time. Reforms are required in both the National and Provincial regulatory authorities. The need to train staff and acquire modern planning tools. Procedural changes are required to make institutions adequately free from political and bureaucratic shackles. Public Transport Fares Box 2: Essential Attributes for Private The output Sector is measurable Transport in terms Service of easily defined levels of service The product of service is identifiable and familiar There is no cartelization or any forms of oligapolistic behaviour between operators That there is price and quality competition between operators There is a competent and transparent Regulator who ensures that the best/cheapest operator obtains contracted services The Regulator is free from Government bureaucratic constraints and budgets 16

22 ritical Issues & Solutions In Sri Lanka, the single most socially sensitive parameter with respect to transport has been the level of bus fares. Low bus (and train) fares have been seen as a social subsidy -jealously guarded by successive governments. This implicit >low fares= policy of the 1960s and 1970s meant the stagnation of fares (Figure 7) for long periods of time (e.g to 1971 to name one instance). A specific fares policy or an index for regular fare increases based on inputs has yet to Bus ost and Fares at 1958 Prices (with percentage grants) ts. per Pax. Km Percentage Grants ost % Grants Fare Year 0 Source :SLTB & UOM alculations f ile : bus1.wk4 / Univ ersity of Moratuwa be adopted. The reluctance on the part of the State to increase fares in keeping with costs, coupled with inability to provide adequate levels of subsidy (to cover the differences between reasonable costs and allowed fares), meant that timely and systematic replacements of aging buses and the procurement of new buses to cater to the increase in demand could not be maintained. As a result, the reliability of the bus service deteriorated as did the comfort factor, as evident in the alarming increase in over crowding. The load factor which measures the average level of loading as a ratio of the available carrying capacity (measured in Sri Lanka as seats + 25% standees) reached 85% by 1978, when the desired figure was around 60 to 70% (Figure 8). 17

23 ritical Issues & Solutions New Bus additions and Load Factors Percetange New Buses added Load Factor Load Factor New Buses % Year 0 Source : SLTB & UOM alculations File : bus1.wk4 / Univ ersity of Moratuwa Although the entry of the private sector into bus transport since 1978 has brought about more regular fare increases, governments still continue to resist legitimate fare increases especially with the rise of inflation experienced during this period. orrespondingly, the load factors have now further increased to over 100% in the state operated buses and 150% in the private buses. It therefore must be concluded that the low fares policy, that initially provided affordable access and mobility especially for the poor, has now led to over-loading, longer travel and waiting times, all of which contributes significantly to the increase in the hidden costs of bus travel. These measures are felt especially by the poor, who are captive to bus transport. A number of policy directives followed by specific programs have been recommended in the Bus Transport Policy (1998) for immediate implementation. These are given in Box 3: Box 3: Recommendations to Proposed Bus Transport Policy 18

24 ritical Issues & Solutions 1. Improved quality is a foremost priority 2. To adopt a policy of a support level of 10% for recurrent expenditure and 10% for capital expenditure by the State. (Many US cities give support levels of upto 75%, while most European cities range between 25-75%). This presently totals Rs 2.6 bn, which is equal to the average State spending over the last six years. The former to be utilized for purposes of a travel subsidy to poor students, operation of uneconomic rural routes, route planning and regulatory improvements. 3. Implement a number of recommended performance indicators tied to the financial incentives (such as new buses) for the Regional Transport ompanies. 4. Permit restrictions to be placed encouraging private bus owners to form into groups of 50 bus operators or more. 5. To adopt a fares policy for the purpose of regular and systematic fare increases 6. The role of the State sector and private sector have to be redefined as follows: The RTs to concentrate on providing basic services at break-even prices after receiving the afore-mentioned support. Fares in the private sector to be fully deregulated but designated as a complementary provider and redirected to operate (I) higher priced-higher quality services and (ii) specific contracted services such as unremunerative rural routes. This will ensure a better balance in the supply of regulated low cost bus transport and qualitatively superior transport at competitive and unregulated prices Goods Transport Road freight transport, which accounts for around 90% of freight movements has been almost exclusively in the hands of the private sector. Over 50,000 trucks are used for this purpose. While the majority of these vehicles are user owned (such as estates and hardware stores) there are a few transport companies, mostly engaged in the transport of plantation produce (mainly tea) and containers. In the case of other goods, they are carried mostly by user owned vehicles. The transport of vegetables is done on a collector-carrier basis. Older and smaller vehicles which make up the majority of the fleet are generally used for occasional hire in urban areas, mostly transporting building materials, agricultural produce from the estates and rural areas. The owners of these vehicles usually own only one unit. Their operations could be considered as part of the informal sector. Freight transport has generally been well served by the private sector. Private enterprise has worked effectively, as loads are shared and in most cases fares are competitive. It has been observed that the private sector, in direct contrast to the performance of the few public sector trucks carry a higher load level and are cheaper to operate per tonne km. However, their is a need for improved technology in the transport and handling of perishable produce such as vegetables, where 30-50% losses are reported. In the case of vegetables, 19

25 ritical Issues & Solutions producers have to transport their produce to olombo, where wholesale markets are concentrated. The development of the Dambulla wholesale market has shown the success of outstation distribution points. There is a need for similar markets to emerge in the other Provinces. The four and two wheeler tractors and since of late the three wheelers are also widely used in rural areas for purpose of the carriage of freight. The wide mix of vehicle sizes and their operational characteristics also enables a choice of vehicles based on size of load and type of terrain in most instances. 2.3 Pricing of Transport The original rationale of post-independence transport pricing sought to favour the poor. Public and goods transport had a number of pro-poor pricing structures set up several decades ago. However, in most cases these appear to have outlived their usefulness and require reformulation. The most important are discussed as follows Low Fares in Public Transport It may be argued that a low fares policy is a necessity as fare levels that are charged may be beyond the affordability of the poor. The State could restrict basic fares to a maximum allowable fare. The State should then reimburse bus operators with the difference between the viable and affordable fares. Many cities the world over extend operating support for public transport in order to keep fares at affordable levels. It is generally held, that the external (social) benefits of providing public transport services out weighs the cost of the financial support. Where public transport is deregulated, it is given to the operator in a number of different methods such as franchised payments, tax concessions, land development rights, public sector obligations (PSO) payments etc. Thus, it becomes necessary to adopt a public transport financial support policy, which is primarily based on the affordability features for the poor Unregulated Fares in Higher Quality Bus Transport The prices for higher quality public transport should be fully deregulated, so that effective price and quality competition could occur. However, in this instance too, the role of the regulator is important ensuring that the passenger can make a choice based on service quality of that will be delivered, rather than what is implied Subsidies and Financial Assistance for Transport for the Poor In this context, the ongoing support for operating unremunerative rural routes should be continued and extended on a rational basis. The Bus Transport Policy Report (1998) 20