Translink's fuel costs rise despite oil price fall
Fuel costs at Northern Ireland's bus and train operator will rise this year despite falling oil prices, it was revealed today.
The amount paid will increase 11% despite the downturn because Translink has already bought much of its diesel and gas in bulk, Regional Development Minister Conor Murphy confirmed.
In the past the so-called hedged price has been below market rates but SDLP Assembly member Thomas Burns claimed an opportunity to cut fares had been missed.
"Even though the price of crude oil has fallen significantly and the cost of diesel and unleaded has dropped a lot on the forecourts, Translink will be paying more for their fuel in the near future, not less," he said.
"This isn't the way to get more people onto public transport. Using the car will be even more attractive to commuters now.
"Fares need to come down and I think an opportunity to cut prices has been missed."
Translink's fuel costs were £17 million in 2004 up to £33 million in 2008.
The practice of hedging, buying around 90% of fuel in advance for a set period at a fixed price, can help protect against rises but means if the price of fuel drops the savings are not passed on immediately. June 2010 marks the end of Translink's current contract.
Ulsterbus and Northern Ireland Railways introduced five fare price increases since 2004, including two in 2008. Rises ranged from 2-9%.
Mr Burns added: "I think that at this stage the matter should now be examined by the Assembly Public Accounts Committee (PAC) to fully determine just how much could have been saved if Translink had looked elsewhere.
"Translink tried to hedge their bets and it didn't work out.
"I hope that getting locked into these deals doesn't prove to be excessively costly and we need an investigation to find out if this will be the case."
Mr Murphy answered a series of Assembly questions on the issue.
He said: "Hedging is industry practice across the bus industry and Translink has operated such a policy for years. Inevitably the hedging price will be different from the market price and it is the case that currently Translink is paying above the market price. In 2009/10 Translink expect their fuel costs to increase by 11% over this year.
"However, in the past the hedged price has been below market price in 48 months out of 69 months from April 2003 to December 2008 and this has been passed on to the public in stable ticket fares at times of escalating oil prices.
"It is also expected that the Translink hedging policy will mean that current market trends are reflected in future fuel prices albeit with a time lag."