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Insight & Analysis - March 15, 2022

Can Nigeria’s Multi-Billion-Dollar Rail Infrastructure Last Another Decade?

On Thursday, March 10th, 2022, Nigeria’s railway infrastructure came under scrutiny. The social media space was flooded with videos of the Lagos-Ibadan Standard Gauge passenger train getting stuck in the middle of nowhere, causing passengers bound for Lagos to be delayed for about an hour before the issue was resolved.

While passengers went to town with the claim that the train had run out of diesel, the railway’s management claimed otherwise. 

In a statement issued the next day and signed by its Managing Director, Fidet Okhiria, the Nigerian Railway Corporation stated that the incident was caused by a fuel gauge failure on the passenger train and not diesel.

“The train gauge had an issue while the engineers thought the diesel in the train tank would take them to Lagos.The train gauge was not reading correctly, so by the time they started moving, the driver discovered that there was no sufficient diesel in the train,” Fidet Okhiria admitted.

Instances like the above point to a dangerous possibility with the rail infrastructure upgrade currently being deployed across the country.

The Lagos-Ibadan railway, which links Nigeria’s southwestern cities of Lagos, Abeokuta, and Ibadan, has quite commendably welcomed an increasing number of passengers since it started commercial operations in June 2021. 

But with just nine months into operation, it is quite surprising that the trains are already having such problems. This then begs the question: are these trains really capable of serving the nation? Are they really capable of going through the many years ahead?

Nigeria’s railway infrastructure: A long history

Nigeria’s railway infrastructure has come a long way and dates back to the 19th century when the first of such was constructed by the British colonial masters, specifically in 1898. It served as a reliable means of transportation for years, but the system broke down following years of lack of a robust sustainability framework, despite the enactment of the Nigerian Railway Corporation Act in 1955.

The National Railway Corporation is recorded as having gone into bankruptcy more than once within the past two decades. This arose largely from a deluge of challenges that beset the corporation, like a lack of maintenance of infrastructure and a huge pile of recurrent expenditure. Several attempts at resuscitating the transport sector have severally run into hiccups until the most recent, which appears to be picking up.

A vital national transportation infrastructure

The importance of a well-linked rail transportation infrastructure to the country cannot be overstated as it provides a buffer to the roads, relied on largely for the transportation of goods, which themselves have been a big challenge for the country to keep up with in terms of maintenance and construction of new ones.

For example, the construction of the 157km Lagos-Ibadan line, which began in March 2017, serves as an important infrastructure in aiding the transport of goods and people. It is credited as being the first double-track standard-gauge railway to be built in West Africa.

The rail line establishes a vital link in the end-to-end logistics supply within the corridor since goods moving to the hinterland are now easily transported by rail from the Apapa port quaryside straight to the Inland Container Depot located in Ibadan, from where they are distributed to other parts of the country.

It is also part of a longer, trans-national Lagos-Kano transportation set up.

When completed, the Lagos–Kano railway project is expected to link the Kano–Maradi line at Kano with a rail link from the Nigerian southern port of Lagos to Maradi in the Niger Republic.

The Ibadan-Kano project would also be connected to the Tin Can Island port as well as the West–East Coastal rail line from Lagos to Calabar, linking Onitsha, Benin, Warri, Yenagoa, Port Harcourt, Aba, and Uyo.

It is quite an ambitious transport layout, but the huge infrastructural leap has also not come cheap.

Constructed with loans

A lack of financing to fund these capital-intensive projects means that almost all of the rail lines across the country are being constructed with loans from China.

The Lagos-Ibadan railway cost $1.5 billion and was funded with a $1.3 billion loan from the Export-Import Bank of China and about $183 million from the Nigerian government.

This loan, as well as others used for other projects, comes with an interest rate of 2.5% p.a., a tenor of twenty years, and a grace period of seven years.

A profitable venture?

While it may look daunting, the rail infrastructure appears to be a good investment, as recent figures show.

Data from the Nigerian Bureau of Statistics shows that the Nigerian Railway Corporation’s revenue in Q1 2021 surged by 33% to N926.72 million compared to N698.4 million, which was recorded in Q1 2020.

Specifically, the Minister of Transportation, Rotimi Amaechi, while speaking during an interview on Channels TV in December 2021, stated that the Abuja-Kaduna train service generates at least three hundred million naira (N300,000,000) every month. He equally added that the Lagos-Ibadan rail line is being run from the Abuja-Kaduna rail service and the ministry pays back over N100 million to the federal government.

All these points to a comfortable position for the country in repaying its debts, but only if everything goes as expected. In a scenario where these trains begin to develop faults and their efficiency is reduced or even get outrightly grounded, the dynamics change. This, coupled with human sabotage efforts like the several instances of vandalization of rail tracks, may end up impacting the longevity of this multi-billion dollar loan-backed infrastructure. 

In a bid to ensure that Nigeria’s railway infrastructure gives maximum returns and serves the nation for years to come, the Nigeria Railway Corporation must ensure that original spare parts are constantly sourced and a healthy maintenance culture is built into the daily operations of these trains. A surveillance system must also be put in place along the rail tracks to ensure they are well-protected.

READ ALSO: How Developed is transport mobility in Nigeria?

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