Fuel Prices and Road Transportation Fares in Ghana

Abstract

We develop a mathematical model for automatic adjustment of new transportation fares in terms of old transportation fares, the number of litres of petrol/diesel a vehicle requires, the quantum of adjustment, the number of trips a vehicle makes on a specified route and the number of passengers a vehicle carries. We recommend that any adjustment to existing fares should be exactly the loading and that any additional amount to the existing fares differing from the loading leads to either overcharging or undercharging of passengers. We also show that any negotiation about the quantum of adjustment to existing fares reduces to the proper assignment of the number of trips a vehicle plies on a specified route. We tested our models on privately operated commercial vehicles using data from major lorry stations in Accra, the National Petroleum Authority and Drivers and Vehicular License Authority in Ghana. The results indicated that passengers are undercharged on some routes whereas they are overcharged on others. The model should be useful to transportation planners, coordinators and administrators in setting and adjusting road transportation fares. It should assist in settling disputes about new transportation fares between passengers and drivers that arise when there is adjustment in fuel prices.