In the case of Rio de Janeiro, fare readjustments are set by different economic indices, determined in the concession contracts for the operation of each mode. The impact of fuel price increases on fare increases, therefore, is based on the share of fuel price changes to the composition of each one of these indices. These increases also affect the fares of services that are not directly reliant on fossil fuels to operate (Rail, Metro and Light Rail), albeit at a lower rate than services that are petroleum dependent. Table 1 summarizes the indices that control fare readjustments and the fuel price share on each one of them for each transit service considered in this study.

_Table 1: Impact of fuel price increases on transit service fare in Rio de Janeiro due to fuel cost increases_

|**Service**|**Base Fare**<br>**BRL**|**Range**<br>**PPP $ (2018)**|**Share of fare**<br>**price increase**<br>**attributed to fuel**<br>**price change **|**Explanation**|
|---|---|---|---|---|
|Bus|4.05|1.84|21.00%|Based on a readjustment formula defined as part of the bus<br>system bidding.<sup>9</sup>|
|Ferry|6.5|2.95|6.01%|Ferry price increase is set by the IPCA (Broad Consumer Price<br>Index,in Portuguese).<sup>10</sup>|
|Rail,<br>Metro,<br>Light<br>Rail|3.8 – 5.8|1.73-2.64|6.05%|These are adjusted based on the IGP-M (General Market Price<br>Index, in Portuguese).<sup>11</sup>|

However, there was limited literature on fuel price increases in Kinshasa. Leveraging information related to historical fare increases, historical prices of fuel locally and observing comparable cities (SSATP, 2001), the share of operating costs that could be attributed to fuel, and hence the expected rate at which fuel prices would impact fares, are documented in Table 2 below. Private minibus operators are more sensitive to fuel prices due to higher burden and risk on drivers, with the public bus service pricing linked to official changes, while the fuel component of moto taxis operating expenses was considered lower. There are no special rates or fare systems operating in Kinshasa where passengers could gain discounts or benefits for using specific services. Despite the system having some regulation through the governor and through a private operator union, there is widespread deviation from these practices, resulting in higher prices. More details on the method used to determine the share of operating costs attributed to fuel price in Kinshasa and on the fare readjustment process in the city are shown in Appendix A – Detailed Data Description.

9 Detailed at https://www.rio.rj.gov.br/dlstatic/10112/4800832/4128528/ANEXOIX.pdf. 10 The IPCA index composition is available at <u>https://www.bcb.gov.br/conteudo/relatorioinflacao/EstudosEspeciais/EE069_Atualizacoes_da_estrutura_de_pon deracao_do_IPCA_e_repercussao_nas_suas_classificacoes.pdf.</u> 11 The IGP-M index is composed of 3 other indexes with different weightings - 60% IPA-M (Wholesale Price Index, in Portuguese), 30% IPA-C (Broad Producer Price Index, in Portuguese) and 10% INCC (National Construction Cost Index, in Portuguese). Each of these has a different fuel price component: 7.07%, 6.03% and 0%, respectively. These are then combined to determine an overall increase. Their compositions are respectively available at <u>https://portalibre.fgv.br/sites/default/files/2020-03/altera_o-de-pondera_es-do-ipa-2013.pdf, https://portalibre.fgv.br/sites/default/files/2020-03/an_ncio-novos-pesos-ipc-jan_2020-_005_-1.pdf</u> and <u>https://portalibre.fgv.br/sites/default/files/2020-03/metodologia-igp-m-maio-de-2014.pdf.</u> 8