Infrastructural Deficit Threatens FG’s Rail Transport Programme

The federal government’s quest to ensure Nigerians embrace rail transportation has continued to suffer setbacks owing to huge infrastructural deficit and the lack of investment in modern locomotives, that have resulted in decline in passenger traffic. The maiden report on railway passenger traffic provided by the Nigerian Railway Corporation (NRC) and the National Bureau of Statistics ( NBS) revealed that the total traffic in second quarter (Q2) 2017 stood at 596,792 passengers, representing decreases of 22 per cent quarter- on- quarter (q/q) and 20 per cent year-on-year ( y/y).

Although increased efforts have been made by the FGN to improve rail transportation, infrastructural deficit still exists.

The Federal Ministry of Transportation projects a total of $36 billion to complete railway connectivity across the country.

The report revealed that there was a total of 1,866 trips (passenger and freight) by rail in the Q2 compared with 1,755 trips recorded in the first quarter (Q1)of this year.

The report revealed that the Lagos mass transit train service (from Iddo/Apapa to Ijoko) recorded the highest number of passengers – 427,760 in total.

Meanwhile, the Minna to Kaduna train service route recorded the lowest passenger traffic, just 573.

The report also cited logistics as a drawback within the agriculture value chain as supply of farm products to end-users remains a challenge.

During the period of review, freight traffic via rail recorded a total of 16,159 tons, with fertiliser accounting for 44 per cent of the total while animal feeds represented only 3 per cent.

However, analysts at FBN Quest believe that the FGN’s plan to inject over 100 cargo trains into the rail transport system will boost product distribution across the country.

“Additionally, the government has secured a loan of $1.5 billion from the China Exim Bank to complete the construction of the Lagos-Ibadan railway network route. Rail is not particularly popular in Nigeria when compared with other transport options.

“But it is necessary that the government continues to invest in / attract investment into the network. Although rail is unlikely to change the behaviour of certain segments of the population, it will reduce the burden on the road network, especially from heavy duty goods, “said FBN Quest.

In a related development, FBN Quest noted that air transport grew by just 0.1 per cent year on year y/y following the recent exit from recession.

“The sector has suffered from relatively low patronage due to softer demand. However, business travel continues to drive air passenger traffic across the country. For domestic travellers, ticket fares doubled earlier in the year and have remained high. Passengers could then secure a return trip ticket for$85 on the Lagos-Abuja route. However, the cost has now risen as high as $175 on the current domestic providers (Arik Air and Air Peace). We expect even higher prices over the next month as we approach the festive season.

“High operational costs lie behind the increased ticket fares. To give one example, aviation fuel accounts for about 40 per cent of operational costs. Industry sources indicate that the price of aviation fuel currently

stands at N265/l, “FBN Quest sated.

They added: “For international travel, fx sourcing issues had a severe negative effect on airline operators as they could not repatriate funds. Nigeria became less attractive for operators and a few airlines reduced the frequency of their flights. However, the CBN has managed to reduce the blocked funds to $175 million from the initial $600 million according to IATA.

“Nigeria’s aviation industry has the potential to become a pan-African hub similar to Kenya. However, the infrastructural deficit within the industry will not permit. The three major international airports in the country are undergoing renovation and expansion.”