New diesel boom could leave cities without buses, say companies

Those who depend on public transport in cities across the country could face a widespread shortage of buses if there is a new increase in diesel, says the National Association of Urban Transport Companies (NTU).

According to the entity, operators will be obliged to ration fuel and only offer trips during peak hours, between 5 am and 8 am and between 5 pm and 7 pm. The rest of the time, the buses will have to park in the garage.

This is the scenario if sources are not defined to cover the additional costs of companies outside of these busy times.

“Companies do not want to practice a selective operation, serving only lines and schedules of greater demand, but they will be forced to adopt this radical measure, as they can no longer bear the successive increases in costs and losses”, said, in a note, the president of NTU, Francisco Christovam.

The number of vehicles running today during off-peak hours varies, according to demand, from one city to another. In several capitals, only half of the fleet runs in the period of less movement.

NTU represents around 400 companies from 2,901 Brazilian municipalities served by organized public transport systems.

“Most of the associates don’t have the cash to face yet another readjustment; there is no way to buy diesel to run, and putting a bus on the street with an empty tank would be irresponsible”, added Christovam.

The sector estimates that the reduction in the supply of services may have a direct impact on the routine of 43 million passengers.

In cities where there are subsidies to pay for the increase in fuel (such as São Paulo, Curitiba and Brasília), the situation could be less serious and the reduction in the fleet would depend on an increase in the subsidy to accompany the diesel readjustment.

Currently, 40 urban transport systems in the country have some definitive subsidy. In 28% of these cases, the subsidy is intended only to finance social policies – free of charge for students, the elderly, etc.

The price of fuel worries the sector. Diesel is the second item that weighs the most in the value of the bus fare, with an average share of 30.2% in the general cost of public transport operators. First is the cost of labor (50%).

The diesel increases recorded since January, on the order of 35% at refineries, represent a 10.6% increase in bus transport costs, according to the NTU.

The recovery in international fuel prices and the rise in the dollar led to a lag in the price of Brazilian diesel, after a mega-increase promoted by Petrobras 56 days ago.

Public transport entrepreneurs fear a new increase to correct the price gap, following the current Petrobras rule, called PPI (parity with international prices).

This Thursday (5), the oil company released its balance sheet for the first quarter. Petrobras closed the period with a profit of R$ 44.5 billion, the third largest for a quarter in the history of publicly traded companies in the country.

A calculation by Abicom (Brazilian Association of Fuel Importers) points out that the new adjustment would have to be 24% for diesel and 12% for gasoline, to compensate for the exchange rate variation and the increase in international oil prices.

According to the entity, the average price of diesel in Brazilian refineries was R$ 1.59 below the import parity, a concept that simulates how much it would cost to bring the product from the United States.

“The situation is so critical, that either increases the price of diesel or lacks the product. The national refineries are not able to meet the demand and, with such a high lag, importing was impossible”, says the president of Abicom, Sergio Araújo.

“There is no expectation of a reduction in commodity prices or a strong appreciation of the real. On the other hand, we see the federal government collecting more and more with Petrobras dividends. It makes sense, at this moment, for the government to create a fund to compensate variations of diesel and cooking gas.”

The president of Petrobras, José Mauro Coelho, took over the company in April defending the current pricing policy, pointing out the risk of shortages in the market due to lack of imports.

City transport systems had already been deeply impacted by the reduction in the number of users during the worst months of the pandemic. An NTU estimate points out that they had an accumulated loss of BRL 25.7 billion between March 2020 and February 2022.

The average financial impact was R$ 1.12 billion per month during this period of the health crisis. Business losses would therefore be exacerbated by fuel pressure.

“It’s an old and conjunctural problem, which came from before the pandemic. Fuels represent a high cost in the tariff and this situation was being absorbed by companies”, says Marcus Quintella, director of FGV Transport, from Fundação Getulio Vargas.

He says that researchers recently concluded that, in a city where the fare is R$4.40, it was calculated that the ideal price, without subsidy, would be R$7.55. “There’s no way to charge this from the passenger or leave the company to its own devices.”

“The desired would be heavy investment in mass public transport, but something is needed immediately. An exemption, with the help of state governments, would be important, but it will not happen immediately, all this takes time.”

In the case of interstate bus transport, Abrati (Brazilian Association of Passenger Land Transport Companies) says that there is no risk of reducing the number of vehicles in operation, following a prerogative of the ANTT (National Land Transport Agency).

Since the 1st, ANTT authorized a 1.447% readjustment in the tariff coefficient for buses that provide interstate and international passenger transport services. The increase does not include semi-urban road transport.

“Despite the increases in diesel prices, we continue to offer promotional prices and we have made an effort to bring passengers back on the roads and win over consumers who today cannot afford an air ticket”, says Abrati.