Railway debt repayment surpasses revenue in Q1 2024 by 2,470%
In the first quarter, of 2024, Nigeria spent more on servicing the debt incurred for building its railways than the revenue generated by its railway system.
The country spent 2,470% per cent more on railway debt servicing than it made from revenue from rail services in the first quarter of 2024.
Total revenue from rail services amounted to N2bn in the first quarter of 2024, according to data from the National Bureau of Statistics.
Passenger revenue totalled N1,420,923,315 billion, and N607,315,323 million was made from goods/cargo. Total revenue for Q1 2024 was N2bn while in 2023, it stood at N6.07bn.
Total revenue for 2023 was 67 per cent higher than the N2bn made in 2024.
The report stated that 675,293 passengers utilized the rail system during this period, up from 441,725 in the same quarter of 2023, representing a growth rate of 52.88 per cent.
“The volume of goods/cargo transported via rail in Q1 2024 stood at 160,650 tons compared to 59,966 tons recorded in Q1 2023. In the quarter under review, the Nigerian Railway Corporation reported an additional volume of goods/cargo transported via pipeline which stood at 8,000 tons,” the report said.
In the first half of 2024, the government spent a total of N51.4bn on debt service payments for loans obtained for the Nigeria Railway Modernization Project (Idu Kaduna Section) and, Nigeria Railway Modernization Project (Lagos- Ibadan Section).
However, when compared with the time frame, in 2023, the total railway revenue was N999.71 million according to NBS in the first quarter of 2023, a total of 441,725 passengers travelled via the rail system.
Recall that the Federal Government aims to achieve N7.01 bn in revenue from train passengers by 2025, as outlined in the Nigeria Agenda 2050 document launched by former President Muhammadu Buhari.
It also aimed to elevate Nigeria to a top middle-income economy with a per capita GDP of $33,328 annually by 2050.
Speaking to the PUNCH on this issue, CEO of Centurion Security Limited, John Ojikutu (retd), emphasised the critical need for a viable business strategy to sustain the sector’s growth.
He highlighted the challenges facing the NRC, particularly regarding revenue generation and operational efficiency.
“Transport services is not something for the federal government. What the government is supposed to provide is supporting services. All these coaches, they should concession it out”.
He questioned the financial sustainability of current passenger fares. He pointed out that without a comprehensive business plan, the rail line risks financial instability and potential collapse within the next few years.
“The amount they collect for passengers from here to Ibadan is too low when you consider maintenance and operational costs. The amount they collect for passengers from here to Ibadan is too small when you think about the cost of maintenance and cost of operation.
“If we don’t do a good business plan, we can never make any profit. If that is what they are making now, I can tell you that in the next four to five years, that Rail line will collapse. Can what they are getting now pay for the salaries of the staff? If they give it to an individual to run, I can tell you they will get profit.
He expressed dismay at the limited knowledge among Nigerians about existing railway services.
“How many people know about the train? Somebody was telling me recently he didn’t know that there was train from lagos to Abeokuta. so even be the railway themselves how have they put it out for people to know that there is something like this,” he noted.
Moreover, Ojikutu advocated for competitive pricing strategies to attract more passengers.
“If vehicles charge between N4,000 to N5,000 for trips to Ibadan, the faster and more efficient train services should be priced accordingly. They should not be making less than N80 to N100 bn annually”, he suggested.
