The Arithmetic of 2018 Hajj Fare

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By

Ibrahim Muhammad

 

As the clock ticks towards the deadline for the payment of 2018 hajj fare by Saudi Arabia Ministry of hajj, there are apprehensions on the part of intending pilgrims as to what the 2018 fare will looks like. Will the 2017 hajj fare be lower of higher than 2018 hajj fare or will the hajj fare costs components remain the same?

 

Analytically, the 2018 hajj fare might be far higher than 2017 if the current exchange rate of N305/1$ subsist. Hajj 2017 hajj costs components consists of 23 components as follows: Makkah and Madina Accommodation fee, Air fare, to and fro, Feeding at Masha’ir, United Agents Fees, Tent C Facilities, 35 days Feeding at Makkah & Madinah and administrative charges. Others are suitcases and uniforms.

 

Last year hajj fare was tabulated based on the N305/1$ which is still what is obtained in exchange market today. There are strong indications that 2018 Hajj fare might be higher due to recent developments in Saudi Arabia unless government pegs the exchange rate for pilgrims.

 

After the last hajj exercise, the electricity tariff in Saudi Arabia has been increased three times. Also, the price of petrol has been increased by almost 200%. The accommodation cost is also going up. Octane 91 fuel which used to cost 75 halalas per liter is now SR1.37 per liter and 95 octane which cost 90 halalas per liter is now sold at SR2.04 per liter. Diesel for industries and utilities has been jerked up to SR0.378.

 

In December 2017 Saudi Gazette Newspaper reports that “consumers will have to bear a threefold increase in electricity tariff with the implementation of Value Added Tax (VAT) and a revised bill calculation system.”
The reports states that “ a consumer currently paying SR200 per month for modest power consumption for three air conditioning units, a few fluorescent tubes, iron, television, washing machine, game console and a refrigerator will now have to cough up SR600 per month.” Considering the facts that each pilgrim will enjoy the above services for minimum of 35 days, the landlords might increase the costs of their accommodations for pilgrims.

 

As a result of the above, “the Hajj Committee of India (HCI) Chairman Mehboob Ali Kaiser recently told the press that it was bargaining hard with Saudi authorities to keep the cost of 2018 hajj in check but local factors may result in the rise of Hajj expenses this year”.

 

“The cost is likely to go up thanks to rise in expenses incurred in Saudi Arabia during the Hajj such as accommodation, transport, food and the like. Notably, the government subsidy did not cover these expenses and was limited to the airfare.” As published by Great Kashmir newspaper dated 18THJanuary.

 

Also, Indonesia Religious Affairs Minister, Lukman Hakim Saifuddin has proposed to the House of Representatives of an increase in the cost of 2018 hajj fare by Rp 900,000 ($68), or by 2.85 percent, due to rising prices of aviation turbine fuel, food services and Saudi Arabia’s government’s hajj tax increase of 5 percent,” as published in Jarkata Globe Newspaper of 25th January 2018.

 

In Malaysia, Lembaga Tabung Haji (TH) group managing director and chief executive officer Datuk Seri Johan Abdullah said although the cost of haj has increased by 15 per cent to RM22,450 from RM19,550, pilgrims will continue to pay the same rate in 2018 hajj” Johan added that as part of its corporate social responsibility, Tabung Haji would bear the subsidy of RM400 million as reported by New Strait Times Newspaper of November 7.

 

Back home, Nigeria has signed Hajj 2018 memorandum of understanding with Saudi Ministry Hajj which effectively sealing agreement on the ‘hajj services’ to be provided for Nigeria pilgrims in during 2018 hajj. There are 23 service components that made of 2017 hajj packages; and it is likely that the same numbers of items will remain in the 2018 hajj cost elements.

 

Thought it is difficult to predict the accurate figure, but the above indices are clear signal because it will be unrealistic to expect the same costs for everything in Saudi Arabia after a threefold rise in electricity prices, petrol prices, and additional 5% VAT in all services.

 

Secondly, the proposed new accommodation policy of having maximum of four pilgrims in a room by Saudi Arabia will also affect the prices of accommodation. Currently, pilgrims’ accommodation payment benchmark is based on bed space. Previously, 6-7 people do occupy a room which auto lower the cost of what pilgrims paid per room. For example, If Kaduna with 6, 570 pilgrims do rents 7 building to accommodates its pilgrims before, they will now have to rent additional 3-4 building for the same number of pilgrims.

 

“In Makkah, the price for a 10-day stay in a five-star, Haram-overlooking suite is SR250,000 ($66,664), while prices start from SR40,000 in hotels around the Grand Mosque but not overlooking it, according to an Al-Eqtisadiah report as published by Arab News Newspaper of 16th June 2017.

 

During the 2016 Hajj, Oyo State pilgrims stays in a Hotel close to Bindawoo ( the same hotel occupied by Kaduina State pilgrims in 2014) that overlook Haram yet Oyo state pilgrims paid SR4,000 Per pilgrims per bed space for 35 days. If you multiply SR4, 000 by let’s say 5 people it will gives you SR25, 000. This amount is still far less than “SR40, 000 being paid per room in hotels around Grand Mosque but not overlooking Haram for 10 days. If we are to camped pilgrims in same hotel for 35 days, it will cost nearly $130, 000 US dollars. Therefore, reducing the number of pilgrims that can occupy a room to four will surely raise hajj fare.

 

Secondly, 2017 hajj cost components was calculated based on N305/$1. Air fare to and fro $1, 650 (N503, 250:00), Accommodation in Makkah $1, 033 (N315, 065), Accommodation in Madina $430 (N131, 150), Feeding at Makkah and Madina accommodation $280 (N85, 445:75), United Agents fees $322:58 (N 98, 386:80), Feeding at Mashair $85.38 (N26, 040:90), Feeding at Arafat $74.17 (N22, 621:00), Tent C $73.37 (N 22,377.85), Tent security deposit $1.33 (N405:65). The dollar value of these services remains the same.

 

Hajj, like economy is dollarized. Hajj is an exercise that takes place in Saudi Arabia. Virtually all the services enjoyed by pilgrims are paid for in foreign currencies with 96% of it being paid in dollars. Accommodations in Madina and Makkah, Air ticket, Unified Agent fee, Payments to Muasasah services and feeding. The naira components which are mostly payable to States Pilgrims Welfare Boards include pilgrims’ uniform, Identity cards and service charges. So, the determinant factor of hajj fare cost is the value of naira against dollar.

 

Currently, naira stands at N305 to a dollar. The arithmetic of 2018 hajj fare is to multiply N305 by $4, 276. 40 which translates to N1, 308,456 without BTA. Last year, BTA has been uniformly pegged at a flat rate of $800 which translates to N243, 403. Adding the two figures together then you arrived at about N1. 5 Million.

 

The only way forward is for government to consider the option of granting both Christians and Muslims pilgrims a concessionary exchange rate of at least to N200/1$. This will effectively brings down the cost of 2018 hajj fare.

 

Ibrahim Muhammad, is the national Coordinator of Independent Hajj Reporters