• Monday, June 24, 2024
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Nigeria rail stutters on passenger decline, rising dollar debt

Nigeria rail stutters on passenger decline, rising dollar debt

Ibrahim Idris, a 35-year-old businessman, is one of the many people who have stopped using trains since the last attack on the 168-kilometer Abuja-Kaduna rail line.

“I used to take the train from Lagos to Ibadan every week for business,” he said. “But after the last attacks on trains, I’m too scared to travel by train anymore. I’m afraid I’ll be kidnapped or killed.”

Idris is not alone in his concerns. Many people in Nigeria are afraid to travel by train, and this is having a negative impact on the commercial viability of rail project, which has recently shown some flashes of improvement after decades of abandonment.

Findings by BusinessDay showed Africa’s biggest economy has invested billions of dollars in new rail lines such as the completion and operation of the 168-kilometre Abuja-Kaduna rail line, the 157-kilometre Lagos-Ibadan stretch, the Warri–Ajaokuta rail line of 327 kilometres, and the completion of the 44.7-kilometer Abuja metro line.

But many of these projects are now struggling to attract passengers.

Aisha Mohammed, a businesswoman, said she used to take the train to inspect some of her clients’ goods in Kaduna every weekend.

“But I stopped after the attack two years. I’m too scared to travel by train now,” she said.

Data from the National Bureau of Statistics (NBS) also showed rail transportation passenger numbers fell by 53.65 percent in the first quarter of 2023, from 953,099 in the same quarter of 2022 to 441,725.

Luqman Agboola, head of research at Sofidam Capital, said the railways are not functioning at maximum capacity as a result of insecurity, vandalism, poor monitoring, and ticket racketeering.

“This has rendered the rail projects grossly underutilised, commercially unviable, and of major concern for sustainability,” Agboola said.

The NBS data also showed that a total of 59,966 tonnes of goods were transported in the first quarter of 2023, compared to 39,379 tonnes in the same period of 2022.

“The last administration failed to harness the potency of the private sector in the rail sector, preferring a model of public financing of rail projects at a time of dwindling public revenue,” Niyi Awodeyi, CEO of Subterra Energy Resources Limited, said.

“The total reliance on loans for the rail projects was an error that will hunt the sector for some time to come,” he added.

Data sourced from the Debt Management Office (DMO) showed the federal government spent $62.57 million to service railway-related debts in the first quarter of 2023.

The DMO breakdown showed Idu-Kaduna rail project accounted for $23.1 million, the Lagos-Ibadan rail project accounted for $15.49 million and the Abuja light rail project accounted for $24.07 million of the debt service payments

“The best approach is private sector involvement in the design, construction and operation of the railway,” Henry Ogbuaku, head, asset management at Growth and Development Asset Management Ltd, said.

He added that railway operation “is a business and not a development project” and must be treated as such.

“The current model will struggle to make profit,” Ogbuaku said.

Data from NBS showed Nigeria earned N768.44 million from passenger traffic in the first half of 2023, a decrease of 63.02 percent relative to N2.08bn in the same quarter of the previous year.

Ogbuaku pointed out that Egypt, Tanzania and Senegal have some of the most developed railway systems in Africa, using electric trains and funded with private sector funds.

“The Brazilian government invited its private sector to identify railway projects they want to invest in. Today, there are about 41 ongoing railway projects in the country. The same thing applies to Tanzania, where the government partnered with a financial institution to raise $1 billion from the private sector to construct the railway,” he said.

Other experts said the federal government must do all it can to increase passenger traffic by protecting rail tracks that are prone to attacks by dangerous elements in the country especially terrorists.

The Federal Government, in the 2023 Appropriations Bill, allocated about N30 billion for the installation of security surveillance systems on the Abuja-Kaduna rail line.

“The 2023 budget earmarks N30 billion for an acoustic sensing security surveillance system for the Abuja-Kaduna railway but that may not be enough to protect other rail stations,” SBM Intelligence, a Nigerian geopolitical intelligence agency, said in a recent report.

Read also: Nigeria yet to begin container haulage via $1.5bn Lagos-Ibadan Rail 2yrs after

The plan to install a security surveillance system came to be after terrorists attacked a train carrying 970 passengers on the Abuja-Kaduna rail line on March 28, 2022, with explosives.

The attack killed at least eight passengers, with 168 people reported missing afterwards, and still, now the issue of insecurity still plagues the rail transport industry.

Earlier in January 2023, kidnappers also attacked the Igueben sub-station in Edo State and abducted over 30 passengers and staff.

“Rail security is part of infrastructure security which is a subset of national security. An improvement in security on the Abuja-Kaduna railway service will have to include better security in the communities and towns around the route. Anything less than that would mean throwing money at the problem,” said Confidence MacHarry, a senior security analyst at SBM Intelligence.