Hundreds of transport companies will go bankrupt because of higher fuel prices

Hundreds of freight and passenger transport companies are likely to cease their activities because of high fuel prices, showed a study of Klassa daily. The sound financial state of carriers is one of the main requirement for their registration.

“This year, I expect about 100 - 600 companies not to be granted a license because they are not able to meet this requirement," said for Klassa Koycho Rusev, Chairman of the Union of Automotive Transport Organisations and of the National Chamber of Transport.

He explained that, regarding heavy freight carriers, about 50% of the service cost depends on the fuel price and any increase leads to a reduction in the final financial results of the companies due to the loss of customers. Sector representatives explained that, each year, the licensed companies for freight transport decrease substantially in number. Several years ago, the carriers in the sector were over 20,000, but now they are between 9,000 and 10,000.

“Bus companies will go bankrupt because of the rise in the price of diesel fuels and ticket prices will increase,” told Klassa Ivaylo Konstantinov, Chairman of the National Association of Bus Carriers. The price of fuels accounts for about 60% of the transport price. "We do re-registration of the carriers, but their financial stability is a basic requirement as well. In practice, this means that another 300-400 companies will drop out of the sector," Konstantinov explained. By the end of this year, licensed passenger carriers are expected to be around 1,200-1,300.

According to officials from the transport sector, the Government must intervene in the pricing of fuels. “I raised the issue that the State should be able to influence major producers and suppliers of fuels in Bulgaria,” said Rusev. According to him, prices should not be so unreasonably high, given the state of the Bulgarian economy, average wages and the expenditures incurred for these fuels. According to experts, however, the State may reduce the excise duty on fuels as a temporary measure. However, a step like this must be agreed with Brussels. Moreover, this would be applied as an anti -crisis measure, which means that the registration of new companies would be suspended, while the declared crisis situation is in force.
Experts from the transport sector explained that a 10% rise in fuel prices means an average 5% increase in ticket prices.

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