Nigerian rail services under threat as spiralling diesel costs quadruple cost of running trains

NIGERIA'S flagship Lagos-Ibadan train service is under severe financial threat after recently released figures showed that escalating diesel costs threaten to derail the programme as the Nigeria Railway Corporation's (NRC) costs are 135.3% higher than revenue.

Over the last decade, Nigeria has begun the process of upgrading her antiquated railway network built by the British as far back as 1896. Still very much stuck in the 19th century, the network made up of 3,505 km of narrow gauge track on which industrial revolution era rolling stock trains run, at speeds of about 50km an hour.

In 2006, the government entered into a contract with the China Civil Engineering Construction Corporation to build a standard gauge line between Lagos and Kano. As part of this project, the Lagos-Ibadan section of the network was launched, alongside several other shorter journeys.

However, the current scarcity of diesel in the country, the NRC is facing an uphill challenge as the cost of running the trains is more than the revenue from the sale of passenger tickets. To help ameliorate the effects of the problem, the NRC has had to reduce trips on its Warri-Itakpe and Lagos-Ibadan train services by half.

Already, there is a negative impact on railway services across Nigeria as a result of the March 28 attack on a Abuja-Kaduna train, that led to the killing and abduction of several passengers. NRC managing director Fidet Okhiria, said that the effects of the March 28 incident was further worsened by the hike in diesel prices, as the NRC was spending more than twice of its earnings from ticket sales on the purchase of diesel.

Mr Okhiria said: “The Abuja-Kaduna train bombing on March 28 has seriously affected us. The Abuja-Kaduna service was doing marvellously well, as at a time, we were hitting N450m monthly and by the time you remove all operational costs you’ll still have something to pay to the government.

“But now, we can hardly buy diesel to operate, in fact, the major headache now is the price of diesel. For instance, on the average, we use about 24,000 litres daily for the Lagos-Ibadan service and we barely earn up to N1.7m per day.

“Now the supply cost for a litre of diesel is close to N1,000. At the filling stations, you get it for about N700 to N800 but if you have a supplier, he will have to put his profit margin, VAT and others and this brings the cost to bout N1,000/litre. So, we are talking about spending almost N4m on diesel alone, when we barely make N1.7m."

He added that in the 2022 budget, the government provided about N500m for diesel, which barely lasts up to a month for rail services across the country. According to Mr Okhiria, the NRC searches for funds from other sources, such as property rents to finance its operations.