• Says FG is just pouring taxpayers money away and getting excuses in return
• NRC operations costs are 400% of revenues. It’s insolvent and not investible!
• MTR of Hong Kong makes $1.8bn profit per annum, so what’s our excuse?
•Corruption charges against senior management reinforces perception problem
• Unbundling the NRC is only way to stop the haemorrhage
Railway reform advocate Rowland Ocholi Ataguba, CEO of Bethlehem Rail has described the Nigerian Railway Corporation (NRC) as a big black hole in which the Federal Government keeps pouring taxpayers money and getting excuses in return. He described the Corporation as insolvent and not investible by the private sector as it is. He made his remarks in a rejoinder to a report in the Guardian newspaper captioned, “Faulty design, vandalism, neglect endanger $3.4b rail overhaul” , in which he provided statistics to support his thesis that the Corporation was literarily a basket case, and recommended the unbundling of the NRC as a panacea for its ills. He commended the report as interesting though allegedly containing material inaccuracies, some of which he identified as, the cost of the standard gauge modernization projects like Kaduna-Abuja and Lagos-Ibadan which he said were higher than reported. He also challenged the notion that Nigeria had built 1,500km of new track infrastructure since 2015 as reported stating that the correct figure was much lower and according to him, the investments in new standard gauge lines in the period under reference would top $6bn rather than the $3.38bn given. According to him, these are made up of Lagos-Ibadan and Kaduna-Kano of at least $2bn each while Kano-Maradi is also about $2bn. All funded by loans from the Chinese with the government providing some counterpart funding. He also clarified that the modernization projects actually commenced in 2006 and not 2015 and that the Coastal railway contract was awarded in 2014, not 2019.
He agreed with the Guardian report and particularly Abiodun Otunola of Planet Projects who contributed to the report that the NRC’s emphasis on passenger rail was misplaced and unsustainable. He also concurred with Dr George Banjo, a multi modal transport expert who also contributed to the report over what Ataguba described as “misaligned priorities and the insufficiency or absence of project feasibility as well as data transparency” .
He reeled out statistics to demonstrate that Nigeria’s railways were not impacting the logistics chain as it ought to claiming that many African countries with smaller networks and serving smaller markets such as Ghana, Cote d’Ivoire and Cameroon, were producing better results than Nigeria. He compared Sitarail in Cote d’Ivoire earning $29m from its 1,260km Abidjan – Ouagadougou railway line in 2023 while the NRC earned less than $5m from its 4,200km network in the same period. He disclosed that the NRC’s revenue of $4.7m in 2023 was produced by operating costs of $29m describing it as unsustainable. He explained that the operating ratio of a railway was a measure of the railways efficiency and performance defining the relationship between the operating costs and revenues. He gave operating costs at 75% of revenues as typical of an efficient railway whereas the NRC’s was hovering at more than 400% which he says indicates that the NRC was insolvent and not investible. He also disclosed that Ghana which has a network about a quarter of Nigeria’s was projecting annual revenues from hauling just manganese on its western line alone of $500m and that MTR Corp of Hong Kong was making profits of $1.8bn per annum. Meanwhile the NRC has been running huge operating deficits since 1964 begging the question, what’s our excuse?
When Rail Business contacted Ataguba for his views on the NRC’s Dr Opeifa’s comments in the Guardian report, he said that he agreed with Opeifa that the NRC had a funding challenge but he added that the NRC also had a structural problem which prevented the funds from coming and being impactful if and when applied. He said, the government alone cannot fund railways due to its under capacity and the private sector will not invest in the NRC as it is because of its incoherent and anachronistic structure. He also feels that the NRC has a perception problem and no longer enjoys the sympathies of the public or their bosses high up in government. According to him, “the general impression is of an inept Corporation steeped in corruption and that the lived experience of users is of unending ticket racketeering and the increasing frequency of mishaps has tarnished its once glorious image of an effective alternative to a then bandit infested Abuja-Kaduna highway. The recent arraignment of its former managing director, finance director and procurement director on corruption charges reinforces that perception of corruption.” When reminded that Lagos-Ibadan seemed to be doing well. He replied that it was probably its honeymoon and hoped that they could keep it up except if history were any guide, it was difficult to be optimistic. He was particularly scathing about the Ujewvu – Itakpe line saying the stories out of that corridor were simply unbelievable.
Ataguba says that the NRC needs to be unbundled to create investible products that can attract investment from the private sector. That there are parts of the railway system such as regulation that are naturally disposed to being run by government and other parts such as operations and asset management that are suited for private investment, and that they needed to be separated so that risk can be borne by the party best able to manage it. He stated that the problem is that the NRC wants to control assets which it has historically not managed well while expecting others to bear the investment risk. “It doesn’t work that way and it is this covetousness that’s at the heart of its obstruction of private investment”, he said. Adding that “It is true that Comrade Opeifa was Transport Secretary at the FCTA and was Commissioner of Transport in Lagos but no meaningful train operations took place during his time in those places. Conversely, he was a member of the last Board of the NRC and they were known to have run up some of the largest operating deficits in its history. So not sure what there is to crow about. The NRC is a mess and he didn’t create it but he needs to be careful not to make it worse by maintaining the status quo. We have a bill in the National Assembly that initiates the unbundling of the NRC. What is required is for all stakeholders to join hands and ensure its timely passage. There is certainly a need for culture change. Hunting with the hounds while running with the hares as the NRC has played all along won’t cut it.” He concluded, saying that the NRC has some of the poorest train and traffic densities in the world.
Asked about how the devolution of railway operations was going since the railway constitution amendment of 2023, Ataguba who was the architect of the amendment said, “we need the amendment to be followed swiftly by the unbundling of the NRC otherwise not much will change. We have a situation where the NRC is regulating metros which it does not have capacity to do. It will also regulate any state railways that would potentially compete with it on inter state services. This is a clear conflict of interest. States are however not rushing to invest in rail either, given the prohibitive sunk costs involved but there are huge opportunities for them if only they knew where to look and would listen to good counsel “. “Lagos has been able to develop a railway metro of sorts because of the consistency in its governance architecture and its relatively deep pockets but it has also benefitted from grant funding for its preliminary studies and other support in its infrastructure development. In other States, even transitioning within the same political parties, changes in political leadership have come with dislocations of programmes and a lack of continuity. Even at that, Lagos has only been able to put into operation just 12 km of rail infrastructure that took it nearly 27 years to build also known as the Blue line. The tracks on which it is operating the Red line belong to the Federal Government and at some point in the not too distant future, the track may no longer be available to it, so it must make plans for its own tracks”. He also said that there are many other States that have talked about building railways but we are yet to see any concrete efforts in developing business plans that are a necessary prerequisite for attracting funding. There are funds available for these purposes but they need to listen to the right channels for good advice, he added.
When asked about the recent accident on the Abuja-Kaduna line, he declined to make comment directly saying, “there is an investigation going on by the NSIB and it would be precipitant of me so I would want to reserve comment until we have their findings. The images trending do not however speak well of diligent operations management if I may say. Overall, there is evidence of under funding apparent but what is more distressing is the demeaning arrangements that the NRC make for the evacuation of passengers when things go wrong. I once saw passengers from a broken down train on the Port Harcourt – Aba service wading through a stream carrying their bags on their heads. Really disgraceful” he added.