East African Business Week

KIGALI, RWANDA - Passenger transport fares across Rwanda have gone up by 5.2% to Rf20 (US$0.033) per kilometer afew days after the government announced it would reduce tax on fuel to lower pump prices in a bid to ease the high cost of living.
 Most routes within the capital Kigali have seen an increase of Rf10 per kilometre from the previous fares. For example, passengers from the city centre to Remera (10km east of Kigali City) are paying Rf200 ($0.33) up from Rf190($0.31). The increase has been very significant on upcountry routes because of long distances.
Currently, passengers from Kigali to Nyagatare (161 km North east of Rwanda) pay Rf3, 200($5.3) compared to the previous fare of Rf2,500($4).
The new fares announced by the Rwanda Utilities Regulatory Agency (RURA), which regulates public transport among other services, started on June 17. The increase has also spread to special hire cars (taxicab) across the country. This is the second time Rwanda is increasing transport fares this year and the increases have been blamed on the high cost of fuel.
While announcing the new fares on the state Television on June 13, the acting head of RURA, Mr. François Régis Gatarayiha, said the increase intends to allow investors to continue providing transport services to the public.
He said that 30% of the cost of investment in transport services goes to fuel, which has also seen several price increases since early this year. For instance, a litre of both diesel and petrol has gone up to Rf1,060($1.7) from below Rf1,000($1.66) last year. This is because the international oil price has also gone up dramatically because of unrest in Libya and other oil producing countries in Middle East.
As a result, Rwanda, which is a net importer of petroleum products and faces high transport costs because of its landlockedness, any increase on international oil prices affects almost the price of every commodity and service in the country.
Since December last year, the annual change in prices also known as annualised inflation has been rising sharply.  In December 2010, annual inflation was at 0.2% and by end of April this year, it had reached 4.98%. It is also expected to hit 6% end of this month and 8% end of the year. High inflation has been linked to high oil prices, which have pushed up the cost of transport and so the cost of production has gone up.
This has resulted into high food prices across Rwanda. To contain rising inflation, the Minister of Finance and Economic. Planning, Mr John Rwangombwa, proposed to lower tax on fuel by Rf100 on a litre of diesel and petrol in the next financial year starting July 1.
This was meant to lower the cost of fuel on filling stations, which would eventually reduce the cost of other commodities like food and services like transport for goods and rent.