Bus travel is one of the attributes that makes Fiji so unique, with its well-mannered passengers, vibrant colors, festive island music, and windows open wide to let the breeze in. Since the popularity of buses in Fiji is expected to continue for many years to come, Fijian authorities have begun to think about ways to transform the industry to make it more sustainable now and in the future.
Following its successful leadership role as president of the 2017 United Nations Climate Change Conference in Bonn, Germany, the Government of Fiji is continuing its efforts to champion low-emissions development across the Pacific region and beyond. One particularly compelling example is the government’s plan to scrap public transport buses and replace them with cleaner, more efficient fleet. The current fleet is obsolete and responsible for much of the country’s greenhouse gas emissions and air pollution. The World Bank supported the government through a preliminary study, financed by Japanese funds, QII-JIT.
Reforming bus transport on a small island can be both complex and costly. In Fiji, 62 bus companies serve at least a quarter of the almost one million population, on daily basis. While bus transport is a profit driven dependable business model, without government subsidies, they would not be commercially viable so the government has leverage to bring about change.
The study analyzed the financial impact of upgrading the current bus fleet, assuming that the entire fleet of 1,662 buses would gradually be replaced, beginning with the pre-2013 manufactured buses as these are the most polluting.
It suggested that commercial banks primary banks, insurance companies, and other financers could work with bus companies to mobilize the necessary financial capital. A number of adjustments could help make the initiative more attractive to potential lenders, such as the creation of a loan guarantee scheme, along with improved bus company management and increased transparency regarding their profits.
The most challenging part of the exercise was to find a way for Fiji to upgrade its buses without penalizing neither taxpayers (through government debt) nor commuters (through fare increases)—and without putting the entire burden on bus companies, which their current economic situation would not allow. Thus, the study explored a combination of funding sources, including the reallocation of the value-added tax on fossil fuels and/or a higher tax on privately-owned vehicles, which would be paid into a Bus Scrapping Fund.
The financing may also come from improved cash flow of bus companies through increased operational efficiencies or good practices, such as the recently introduced e-ticketing system, which contributed to reduce fare evasion and increase accountability between the bus companies and the regulator.
Other options include incorporating the Bus Scrapping Fund into a larger program, such as the Sustainable Energy Financing Project (http://www.fdoe.gov.fj/index.php/power-sector/sustainable-energy-financing-project-sefp), or negotiating a credit line from multilateral development banks
To persuade stakeholders that such a transition is worth implementing, the study highlighted the multiple benefits to be gained from clean technology, including emission reductions and improved societal wellbeing. The study analyzed the impact of using various engines, including Euro IV, Euro V and Euro VI engines standards, electric and hybrid vehicles, which would all bring significant improvement over the current fleet. The bus technology selection has to take into account several factors such as the investment, the quality of the roads in rural areas, the lack of natural gas distribution infrastructure deployment and power grid limitation.
The study argues that a sustainable bus industry is possible, and suggests conducting a thorough cost-benefit analysis to determine who should bear the cost of the bus scrapping and replacement scheme. In addition, the government would need to send a clear message toward the regulatory framework predictability, in order to foster that private investment would flow to bus replacement scheme. Continuing to assess the efficiency of the bus industry efficiency and measure its carbon footprint more accurately is also critical. These lessons are relevant for other countries facing similar challenges.
Of equal importance is convincing bus operators and the public that the reform will make riding buses a more pleasant experience in Fiji for years to come!