Competition Reforms in Key Markets for Enhancing
Social & Economic Welfare in Developing
Status of Research on Passenger Bus
Transport Sector in Ghana
Paulina Agyekum
1
Outline of Presentation
•Introduction
•Overview of Relevant Sectoral Reforms
•Methodology
•Status of Work
•Way Forward
•Conclusion
BUS TRANSPORT IN GHANA
1
Characteristics of Road Transport System
•T
• Road transport is the major carrier ; 98% of freight and
95% of passenger traffic carriage.
• About 1,300,000 Vehicle fleet
• Used vehicles form 90% at an average age of 15
years
• About 4.75million passengers are moved annually
• Buses form 60% of vehicle fleet and carry 68% of
passengers.
• Passenger cars (per 1,000 people)is 18.
• Percentage of Income spent on transport by an
average person: 17% -25%
Background to Policy Action
•TPublic transport companies:
•Government is the majority share holder so
exercises dominant influence on the companies
and fares are subsidised.
•Private Sector
•It is made up of individual transport owners eg. 9
out of 10 drivers do not own the vehicle;
•The majority of public transport vehicles are in
single unit ownership only and only a few have
larger fleet sizes.
•They do self regulation or regulate through unions
Background to Policy Action
•T
•Regulated
Regime:
Omnibus
Services
Authority Decree of 1969 and The Omnibus
Services Decree of 1972 to include Licensing
Authority
•Concessions and subsidies were provided and
this acted as a strong barrier to competitive
market entry.
•Liberalized economy was introduced in early
90’s which resulted in deregulated public
transport services with competition
Background to Policy Action
•Public transport undertakings were privitesd
•Lack of buyers resulted in continued decline in
rolling stock and other assets.
•Catalyst for change: There was public
pressure for better quality PT services
•Re-regulation: Re-regulation for-market
competition was introduced.
•Metro Mass Transit Ltd (MMT is a product of this
Relevant Sectoral
Reforms and their Impacts on
Bus Transport Market
Summary of Policy and Regulatory Inst
•1. Road Traffic Ordinance 1952, Repealed by Road
Traffic Act 683 of 2004 and Amended with Road
Traffic Act 761 of 2008.
•Road Traffic Regulations LI 953 of 1974 repealed by
LI 2180 of July 2012
•National Transport Policy
•Medium term development plan.
Issues
•Road safety
•Service Management
•PPP
Selected Policy Reform Issues with Competition
1
1.Policy Statement NTP, 4.2.4.3 2008:
– Government will invest in transport and subsidize
transport services.
2. Sector Medium-term Development
(SMTDP): 2012-14, Section 4.2.12
– Establishment of Metro Mass Transit (MMT)
Plan
Selected Policy Reform Issues
3. Policy statement 4.2.4.1 of NTP (2008):
– The private sector will be encouraged to invest in
transport infrastructure and services
4. Regulation 121 of Road Traffic Act 2004:
Registration of Commercial Vehicle and
registration Operators along specific routes
Policy Statement NTP, 4.2.4.3 2008:
Government will invest in transport and
subsidize transport services.
Introduce Metro Mass Transit (MMT)
i. Apply subsidies in a transparent manner,
targeting the most
vulnerable
and
excluded Groups.
ii. Provide competitive fares
iii. Ensure mass movement
Research Hypothesis
Hypothesis
Subsidized bus transport systems are not
commercially viable and sustainable
Research Questions and Elements of Competition to
study
•What is the market share of MMT
What is the impact of subsidy and
concessionary fare regime on competition
in the bus transport market
What is the operational performance of MMT
in terms of cost effectiveness and
sustenance
•How does MMT operations impact on
consumer need
Data Collection
• MMT performance assessment for cost effectiveness
and competition
– Revision of documents and collation of information
from records on operational performance
– Consultations with Management of MMT service
• Interviews with private operators
• Perception survey of passengers using MMT
• Consultations with Government Agencies
Policy statement 4.2.4.1 of NTP (2008)
•T
•The private sector will be encouraged to
invest in transport infrastructure and
services
Strategies
•Explore PPP (Public Private Partnership)
and ‘concession’ options for investment
in transport
•Expand private sector investment in the
transport sector for increased service
provision and improved efficiency
Policy statement 4.2.4.1 of NTP (2008):
Hypothesis
• Private sector investment in passenger bus service
for intercity transport is commercially viable.
• Research Questions
• What is the threshold of private sector investment
• Is private sector investment cost effective
• What is the effect of private sector investment on
the competitive market.
• What are the competitive strategies
• How does this impact on consumers
Data Requirements
•Operator performance assessment through
Private Transport Operator Survey
•Consumer needs assessment through stated
preference surveys
•Institutional Surveys involving stakeholder and
affiliated institutions
Regulation 121 of Road Traffic Act 2004
• Registration of commercial vehicles and registration
of operators along specific routes
Strategies
• Private commercial bus operators to belong to
identifiable
transport
company’s with formal
management licensed by the Ministry or its
accredited agents.
• Bus companies to operate under precise rules set by
a transport regulatory agency.
• Allocation of bus routes on the basis of transport
needs through route franchising whereby a franchise
will be awarded through competitive tendering
Regulation 121 of Road Traffic Act 2004
Hypothesis
•Effective and efficient management of Route
registration is not feasible in Ghana.
Research Questions:
•How easy is it to register with a bus company
•Who determines which route should be
registered.
•How do they secure their continued operation
within the Permit system
•Are they able to comply with Permit requirements
•How has it impacted on competition
• Is there capacity to monitor compliance across many
routes and track sub-contracting of routes
Methodology
•Literature Review:
– Bus operation characteristics
– Competition in bus transport markets
– International practices
– Methodologies for competition assessment
• Secondary Data Collection:
– Documentations on bus operation characteristics
• Primary Data
– Field Surveys through interviews
– Key Informant Consultations
– Focus Group and Participatory Discussions
– Field Observations
Secondary Data Type and Source
Data Source
Data Type
• Policy and regulatory
instruments
• Mid Term Development
Programme
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Legal framework
Sectoral policy
Planning
Privatization design
Taxes and subsidies
Procurement
Concessioning
Franchising
Pricing
Control and penalties
Technical regulation
Quality standards
Primary Data Source: Government Institutions
– Representative Government Agencies eg. MOT,
MRH, DVLA, Metropolitan, Municipal and District
Assemblies
– Enterprise eg. Insurance Companies,
– Driver Unions eg GPRTU,
– Civil Society Groups eg. Ghana Pass.
Primary Data – Government Institutions/Enterprises
• Policy regulation, priorities monitoring and evaluation
• Institutional systems for transport management
• Provision of infrastructure eg, roads, bus terminals, traffic management and
calming
• Taxation and pricing systems
• Level of government control over services and fares
• Easy service and fare integration
• Sensitivity to social objectives
• Level of Political interference in day-to-day operations
• Level of government planning and oversight of services and fares
• Needed
• Vehicle design standards
• Enforce safety and operating rules
• licensing policies (e.g., number, renewal period, ceilings on ownership)
• Public information and marketing
• Governance and institutional capacity
• Competent regulatory institutions
• Able to plan route networks, administer regulations,
• guide industry development, and monitor outcomes
• Capital availability and Investment
Primary Data: Transport unions/ civil society Groups
Rules of conduct and operation
Enforcement of rules
Regulation cover on : Fares, Service levels: frequency, hours,
accessibility, Service quality and reliability, crowding
Vehicles: access, comfort, safety, emissions
Effectiveness of regulations
Legal basis to impose the appropriate obligations and
incentives
Competent regulatory institutions
Able to plan route networks, administer regulations,
guide industry development, and monitor outcomes
A responsive operating industry
Amenable to control, willing to enter into competition
and to invest (e.g., buses, garages)
Primary Data – Operator Surveys
• Number of companies and buses
• Source of funding for vehicle
acquisition
• State or quality of buses
• Age of buses
• Type of ownership
• Market entry requirements
• Operational arrangements
• Operational factors affecting
• Routing
• Scheduling
• Trip frequency
• Transport fares
• Turn over
• Remuneration
• Taxes and subsides
• quality
or
market
factor
differentiations
• Vehicle Operation Costs
• Cost recovery
• Availability of facilities
• Management incentives
• Level of efficiency and service
quality
• Financial sustainability
problems
• Amount of service operated to
insure profitability and quality
• Government grants operating
rights to private companies
• Assistance in vehicle
procurement
• differentiation of product quality, image, services
• Constraints
Primary Data – Operator Surveys
•Entry and exit
requirements
•Capital availability
•Specialisation
•Nature of
competition
•Patents
•activities
•- investment
•- business culture
•Access to finance for
vehicle replacement,
when required
•risk taking culture
•- employment
concentration
•Value-added
Primary Data – Operator Surveys Route
Registration
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Route Registration
Secure their continued operation within the Permit system
Comply with Permit requirements
Optimise the number of trips operated per day, and minimise idle time
at terminals
Optimise revenue, either through direct collection or the daily rate
agreed with operating crews
Manage cost items, including fuel, parts and maintenance
Ability to monitor compliance across many routes and thousands of
vehicles
Ability to track sub-contracting of routes
Ability to verify permit on-the-spot
Better control of floaters
Ability to monitor violations of bus priority facilities
Data Type by Source – Passenger Surveys
•Transport Availability
•Trip purpose
•Ability to make Choices
•Affordability
•Frequency of travel
•Comfortability
•Service Reliability
•Observed Changes
•Concerns
•Suggested interventions
•Budget/income of the
transport user
•Travel Time
•Waiting Time
•Information
•Scheduling
•Cleanliness of buses
and terminals
•Safety
•Security
Scope
• One (1) Intercity and One (1) intracity service route.
• The MMT as a service provider and Two (2) intercity
and two (2) intra city private bus operators
• Intracity Service: Potential routes for the study include
major routes from the City Centre to any of the four
(4) cardinal points of the city
• Intercity Service: Major routes providing outlets from
Ghana and also linking different regional capitals
Methodological Framework
Vertical and Horizontal Comparison’s of
operation types by reform impacts
•Comparison between incumbent and by
those affected reform
•Comparison between operational types –
intra and intercity service
Analytical Framework
• Assess degree of competition and outcomes based on
• Passenger preference
1. Operational
products)
Efficiency
(based
on
tangibles
and
2. Cost Efficiency (based on cost benefit analysis)
3. Quality Control
scoring analysis)
(qualitative based on weighting and
4. Competitive environment in relation to Political
Interference (qualitative assessment), Government Skills
Required
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Analytical Framework
• A gap analysis of consumer needs, operator
performance and the role and performance of
relevant institutions and agencies
• Innovations
• Sustainability
• Development of an Effective Competitive Framework
• Institutional capacity assessment
• Development of capacity development framework
Data Availability
• Comprehensive study on MMT (2010)
• Passenger Demand Study for Intracity service (2013)
• Pockets of operational studies
Conclusion and Way Forward
•Complete desk studies on required analytical
framework and fine tune analytical framework
•Complete Secondary Data Collection
•Proceed with primary data collection
•Conduct data analysis and reporting
THANK YOU