Government preparing to raise Baku metro fares?
Baku metro fares
The government is preparing to raise the fare in Baku subway, users of the Azerbaijani segment of social networks believe, after news appeared in government media that the cost of passenger transportation is much higher than the fare. Is the cost of fare in Baku subway really high, and why is the government trying to get rid of subsidizing the subway?
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The statement of Hidayat Mammadov, deputy chairman of Baku Metro CJSC, about the cost of transportation in the subway of the capital of Azerbaijan has caused heated discussion in society.
The official representative of the subway said that transportation of one passenger costs the state 0.68 manat [$0.4]. Currently, the fare in Baku subway is equal to 0.4 manat [$0.24].
In his statement, the deputy chairman draws attention to the fact that the cost of transportation exceeds its value by more than one and a half times.
As Azadlıq radiosu (Azerbaijani edition of Radio Liberty) notes, the official representative of the subway forgot in his statement that the passenger flow in the Baku subway has not yet increased to the pre-pandemic level, and this can be verified by looking at the official summary of the State Committee on Statistics.
According to official data, a year before the coronavirus pandemic, in 2019, the Baku metro transported 237 million passengers. Due to the fact that the metro was closed during quarantine period, this number was only 75 million in 2020 and 90 million passengers in 2021. Last year the number of transportation reached 209 million. Consequently, even in the absence of any restrictive measures, passenger traffic in Baku Metro has not yet returned to pre-pandemic values. On the contrary, 28 million fewer passengers were transported in 2022 than in 2019.
The publication notes that government agencies have not conducted any studies to investigate the reasons for the decrease in passenger traffic, but this fact can be attributed to several factors. One of them is the increase in unemployment. Last year, the unemployment rate in the country decreased slightly compared to a year earlier, but it is still above the pre-pandemic level. The fact is that quite a few businesses closed down during the pandemic, resulting in job losses. Consequently, the fewer people who work, the fewer who ride the subway to work.
Another reason for the decrease in ridership can be attributed to the widespread practice of working from home during the pandemic. Although the pandemic is behind us, some businesses allow their employees to occasionally work without leaving their homes. Thus, the metro management should take into account that the cost of transportation has increased due to the decrease in the number of passengers, Azadlıq radiosu writes.
Who compensates for the shortfall?
Every year, the state budget of Azerbaijan allocates an amount to subsidize the Baku Metro to compensate the costs of the joint-stock company.
In the draft budget for 2024, 50 million manat [about $29.4 million] is allocated for this purpose. The purpose of subsidizing is specified precisely to compensate the difference between the cost of transportation and the cost of metro fare.
Last time the cost of metro fare in Baku was increased on January 31, 2023 – from AZN 0.3 to AZN 0.4 [from $0.18 to $0.24].
By methodically increasing the metro fare, the government is trying to get rid of subsidies for the difference between the cost of transportation in the subway and the actual cost of travel. From this point of view, in the opinion of most experts, the cost of transportation in the subway appeared on the agenda not by chance.
The source reminds that subsidizing of passenger transportation in public transport is quite a common practice all over the world. Even in economically developed countries, urban transport receives subsidies from the budget. In other words, it is wrong to expect equalization of the cost of transportation and fare.
On the other hand, it is not clear where the amount of transportation cost comes from. CJSC “Baku Metro” did not explain the methodology used to calculate the cost of transportation of one passenger.
Subsidizing a ski resort or a metroplex – which is more important?
AZN 50m has been allocated from Azerbaijan’s state budget for 2024 to subsidize the Baku metro. The total amount of budget expenditures next year, based on the draft budget, will amount to AZN 36.7 billion [$21.6 billion]. In other words, the subsidy for the subway work is only 0.2 percent of the total expenditures.
And if we compare this amount with the sum of other expenditures from the budget, the subsidization of metro work will seem more than fair.
For example, 12.1 million manats [$7.1 million] is planned to be allocated from the budget to support the Shahdag ski resort, where maintenance costs exceed the amount of profits.
“What is more important for the government: supporting the work of the metro, which is used by millions of the country’s residents, or the hotel complex on the highlands?” the Azadlıq radiosu piece said.