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E-hailing services reject South African government price control draft bill

Uber
(Image credit: Uber)

South Africa is know for its unreliable public transport system and so has been a great base for ride-sharing companies like Uber and Bolt which have readily filled this void. 

Currently, the companies have control over their pricing and are only restricted by the rules which were put in place prior to their arrival. 

However, the South African government are considering a new Economic Regulation of Transport Bill which has e-hailing companies concerned. 

This draft legislation wants to put in place a number of controls which specifically relate to safety, competition and transformation.  

This is understandable as South Africa has faced issues in this sector with regards to these elements. 

Many South Africans still remember the taxi protests which resulted in Uber drivers being attacked, as metre taxis felt they were being undercut by Ubers lower prices and better service. 

Safety has also been a concern as incidences are often reported of Uber and Bolt drivers harassing passengers, especially women. Bolt has an especially poor record when it comes to following up on these offenders and making sure they can no longer operate. 

However, while the companies initially supported the draft legislation, the inclusion of price controls has resulted in a backlash. 

What the price control may comprise of

The bill says that ‘every regulated entity is subject to price regulation in accordance with a price control determined by the regulator’.

- A schedule of tariffs, charges, fees, tolls or other amounts that may be imposed by the regulated entity for the use of, or access to, any transport service or facility offered by that regulated entity;

- A limit on the total amount of revenue it may raise from the facilities and services offered by it;

- A limit on the return it may derive from the assets utilised by it to provide its facilities and services.

Bolt and Uber reject price control 

The companies are understandably against the price regulatory aspect of the bill. 

Bolt specifically pointed out that price controls undermine the context of e-hailing as it works on a model which sizes up levels of affordability according to the different services. 

They believe that pricing regulations like this would further harm the public transport sector which is already underserved as it will remove the possibility of innovation for e-hailing services.

This makes sense as all e-hailing services run on a fluid price model which adapts for demand and supply. When there is an increase in demand, the prices surge in accordance. While many of us hate this, it is what helps tide over drivers in periods which are quiet. 

This model is also what keeps the prices fairly low in comparison to the standard R/km taxis.