Under the existing law, the Board of the Nigerian Railway Corporation (NRC) is the primary authority on railways in Nigeria. At a time when significant sums of public money are being expended on the railways, a key element of monitoring and control is in oversight management. In recent times, the board has been at sea and unable to perform its primary function of credible oversight and providing strategic direction to the corporation.
The constitution of the Board has traditionally been a source of political patronage and given the long absence of effective railway activity in Nigeria, there is no pool of seasoned railway technocrats to draw from to sit on its board. Its chairmen have typically been heavyweight politicians who could only be permanently distracted by their primary calling of politics. The board has thus been handicapped in the performance of its obligations and the nearly N2 trillion committed to the railways by the federal government in recent times, portends a grave shortcoming.
In terms of priorities, the next Chairman should have an appreciation of the lapses in the implementation of the various capital programmes and how they integrate into the strategic vision. It should concern the next Chairman that when the Corporation says it is prosecuting a 25-year programme, no one is certain of when the 25-year period began nor when it ends nor what the final products will be. The NRC has not provided any credible performance benchmarks to monitor progress nor demonstrated that value for money is being achieved in the programmes. What is however clear is that the Corporation has consistently failed to deliver projects on time nor to impact the economy as it should.
It should also concern the Chairman that the N38bn emergency rehabilitation as defined in the 25- year vision has inexplicably become N100bn wholesale rehabilitation. That this changes the dynamics of system conversion and invariably undermines the fundamentals of the 25- year vison. That four years after the commencement of rehabilitation which the NRC said would take 10 months and over a hundred contracts later, there is still not one completely rehabilitated railway line in Nigeria at present.
It should concern the Chairman that the Corporation recurrently expends about N5bn annually and earns less than N1bn in return. This suggests that it is already haemorrhaging cash and he should be concerned that when his managers speak, their emphasis is on government funding and the new equipment they want to buy or have bought, people they want to hire etc rather than issues of labour and assets productivity, operational efficiency, revenues and profit. That the concept of a viable and sustainable railway business still appears alien to an organization in a competitive environment must also concern the Chairman.
In terms of strategic direction, a priority is the restructuring of the railway environment as premised by the 25- year vision. This entails the separation of regulation from operations, policy making from implementation and critically appraise the concessioning of the operations and maintenance of the NRC. Bottom line is that the Chairman must appreciate that he is superintending a business in a competitive environment, the peculiar and strategic circumstances of its ownership notwithstanding. It will swim or sink as dictated by market forces rather than the will or depth of its benefactor’s resolve. The NRC competes with the road sector for business – with cars and buses for passengers and trucks for freight and until it offers a competitive service, it will not regain lost market share. The government has historically been partial in its incentives to roads over rail coupled with its poor enforcement of axle load limits on the roads. The Chairman needs to secure a level playing field for rail.
The NRC needs to get out of activities and markets for which it lacks the capacity and wherewithal to effectively deliver or compete in, especially where credible alternatives exist. Consigning the concessioning of operations and maintenance of the NRC to an indeterminate longer term future is a no- brainer. It is inconsistent with the 25- year vision and guarantees that the rehabilitated and newly acquired assets would have been degraded to the extent that they would need another bout of rehabilitation before any credible private interest will emerge. Funding future asset renewals should also weigh heavily on the Chairman’s mind.
That the asset utilisation of recently rehabilitated track is still abysmal with only 3 trains running from Lagos to Kano per week must worry the new Chairman. Recall that one of the unique characteristics of transport infrastructure is that unutilised capacity cannot be stored. So an unused train path, ship’s berth or airport take off slot is lost for good. The average life of a railway asset is 25 years whether it is utilised or not thus the need to optimize infrastructure and service capacity in order for railways to be competitive and justify investment. It is thus a no brainer that using railway infrastructure sparingly does not preserve its life. So building railway infrastructure and not utilising it optimally is a colossal waste of time and resources and for every day or appropriate moment that trains do not run on the rehabilitated railway between Lagos and Kano, the NRC loses money in depreciation and unearned revenues. A private railway operator would have quickly made sure that he earned every penny available because his survival depends on it. He will also provide a good service but not so the NRC
It is instructive therefore that 12 months after the “epochal” commissioning of the “rehabilitated” Lagos – Kano line, the NRC can only talk about threethrough trains from Lagos to Kano per WEEK! There is no gainsaying that in a similar period of 12 months, a private railway operator would have been running five freight trains per day on that same line by now. That is 150,000mt of freight per day equivalent to 4,300 trucks per day off the major highways! The NRC sadly comforts itself with an average of less than 400mt per day equivalent to 12 trucks per day, saving much fewer lives if at all and making no significant impact to the Nigerian economy.
The Apapa Port alone probably handles over 5,000 containers a week. With the establishment of a rail link to it in another recent blaze of publicity, it is disappointing to note that the NRC only evacuates about 20 containers a week from Apapa Port. This may be one reason that the Apapa-Oshodi express road remains a present day nightmare for road users. A private railway operator would easily secure 40% of the container business in no time at all, significantly impacting on road congestion particularly in the Lagos area in the process but the NRC lacks the incentives to be so driven.
Furthermore, a competent operator would not have rehabilitated the track without the rail sidings and passing loops included. Realising belatedly that a railway without sidings or loops is as good as a highway to hell, the NRC has now scrambled a contract to rehabilitate sidings and loops many months after it declared a new dawn for rail travel between Lagos and Kano. In any case, if the NRC’s track record is anything to go by, it will probably take years to complete this new contract ensuring its asset utilisation remains tepid for a long while yet. Incidentally, the sidings and loops are not wholly included in the ongoing rehabilitation of the Port Harcourt-Maiduguri eastern line. This m-akes you wonder if the NRC has learnt any lessons from its western line rehabilitation.
Importantly, the Chairman must appreciate that it is not poor infrastructure that brought the NRC to its knees but rather its uncompetitive products, inefficient operations and incoherent business strategy. Worryingly, nothing has changed on that score and if the NRC continues as it is, history may well repeat itself. For instance, there is no evidence that the NRC has a credible business plan nor is responsive to the needs of its customers. It is 100% dependent on funds from the exchequer and lacks the incentives to be competitive or customer focussed. It is settled in the 25- year vision that concessioning the operations and maintenance of the NRC to competent private sector operators is the way that secures its long- term future.
So why the prevaricating? A management contract or one dressed as a concession, does not provide the same incentives because the government bears the financial risk for failure.
To Be Continued -
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