Lagos-Ibadan rail service in costly, unfriendly takeoff
• Nigerians decry high fares
• Take a ride before you complain, NRC reacts
• Govt should consider social benefits — LCCI
The commercial activities of the Lagos-Ibadan Rail Line struggled to a start on Monday. But its speed is being delayed by controversy over ‘elitist’ charges and concern about its commercial viability. There is also skepticism regarding its capacity to generate enough income to repay more than $1.5 billion in debt incurred on the project.
This week’s inaugural commercial trip only amplified the viability question. It turned out that only one of the several thousands of Nigerians that daily ply the Ibadan-Lagos route was willing and able to buy a seat (at the cost range of N3, 000 and N6, 000) for the 100-kilometer trip in the hundreds-capacity passenger train.
As Nigerians wailed over what they described as restrictive fares, the Nigeria Railway Corporation (NRC) Monday announced commercial service operations on the long-awaited Lagos-Abeokuta-Ibadan standard gauge train. But the trip, which was expected to kick-start the operation of the service, many thought, would give the masses a cheaper alternative to the dreaded Lagos-Ibadan road, recorded just one passenger on board.
The newly introduced service, according to NRC, provides fully air-conditioned train services in the economy, business, and first-class categories. The corporation deployed only one Diesel Multiple Unit (DMU) to kick-start the operation.
Transportation Minister, Rotimi Amaechi, had announced a price regime of N3, 000 for the economy, N5, 000 for business, and N6, 000 for first class. He explained that the charges of Abuja-Kaduna Rail Line, a distance of 190 kilometers, were merely transferred to Lagos-Ibadan, a much shorter route.
However, independent investigation by The Guardian showed that the fare list for the standard gauge railway from Lagos- Abeokuta-Ibadan zone 1-2 are as follows: 24-seater coaches (N6,000), 56-seater coaches (N5,000), 68-seater coaches (N3, 500), and 88-seater coaches (N2,500).
For Lagos-Abeokuta ticket, Zone 1 only, the fares are a 24-seater coach (N4, 500), 56-seater coach (N3, 500), 68-seater coach (N3, 000), and 88-seater coach (N2, 000).
Passengers of zone 11 of the standard gauge railway from Abeokuta to Ibadan are charged between N2, 000, and N600.
Nigerians, who reacted via social media, had knocked the government for the fares, describing it as outrageous and imposed to make the service an exclusive privilege of the rich who are increasingly wary of the risks of driving on the roads.
Nigeria had, in 2017, secured a $6.1 billion loan from China Exim Bank for the construction of Calabar-Port Harcourt, Lagos-Ibadan, Lagos-Kano rail, and Lagos to Kaduna railway and another $1.5 billion counterpart funding for the Lagos-Ibadan project.
Several other loans have been incurred since then to fund President Muhammadu Buhari’s rail project, which the government said would support the new industrial revolution drive of the administration.
The rail loan is part of the N31.08 trillion-sovereign-debt burden that is currently weighing heavily on the country’s fiscal position.
Next year, 24 per cent (almost a quarter) of the N13.08 trillion proposed budget would be spent on debt servicing. The budget itself will be 40 per cent funded with “fresh borrowings” to be serviced or repaid by taxpayers.
Stakeholders, including the organised private sector (OPS), labour unions, and civil society organisations (CSOs), have demanded that workers who bear the burden of the debts incurred on critical infrastructure should be able to afford the train service.
Sadly, a worker earning the N30,000-minimum wage will spend one-fifth of her salary for a return ticket (on the economy class coach) to Ibadan.
The Nigeria Union of Railway Workers (NUR) has dismissed this as unacceptably high. It noted that the charges turned the rationale of building the infrastructure with borrowed funds on its head. The union said the service could only attract patronage and be commercially viable if it were made affordable to the poorest of the poor.
Unfortunately, the fares are much higher than charges by commercial vehicles. Lagos-Ibadan costs about N1, 500 by road. Apart from the face value of the tickets, the logistic of accessing the train terminals, road users also complained, is a major deterrent that should have been compensated with a much-lower charge.
Protesting the charges, Secretary-General of NUR, Segun Esan, said loans are taken to fund the various railway projects, including the new Lagos-Ibadan, are project-tied – a reason the authorities should ensure that projects are commercially viable.
To enhance their commercial viability, NUR said the Federal Government, through the Ministry of Transportation and the Nigerian Railway Corporation, must wear the robe of a shrewd capitalist whose business success solely depends on the profits it makes.
“Certainly, the prices should be the ones the masses will pay to make the train service self-sustaining and efficient enough to indemnify all loans taken to build it,” he suggested.
According to the Manufacturers Association of Nigeria (MAN), the government’s business is often regarded as no man’s business; hence, the need to partner with the private sector to run enterprises, like rail system, that is expected to run profitably.
Acting Director-General of MAN, Chuma Oruche said rail services should be a cheaper alternative to road and that commuters would ignore it when seen as an expensive substitute for vehicles.
“There is a substitute for rail service. We are not considering the economic decision. It will not compete with road transport, which is cheaper in the case of Lagos-Ibadan. When I heard that only one passenger was taken to Ibadan, I was amused. It could have made sense if all the carriages were filled up at N1000 rather than carrying one passenger,” he said.
But Director-General of the Nigeria Employers’ Consultative Association (NECA), Dr. Timothy Olawale, commended the Federal Government for starting the rail service, explaining that it would enable the freighting of consumer goods and refined petroleum products from the port to other parts of the country and reduce pressure on road infrastructure.
Olawale, however, expressed concerns over the high cost of the service.
He said: “While we appreciate the fact that the rail was constructed with a loan sourced from the Chinese government and the government wants to repay the loan, the price range of N3000 and N6000 per ticket is higher than the current fare of public transportation, which is between N1, 500 and N2000. This will certainly inflate the cost of transportation on that route.
“As Nigerians are the ones who will pay back this loan, it is only fair that they should be able to enjoy the benefit of a cheaper form of transportation since it will be patronised more by the masses than the rich.”
Also, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, said the charges should not be higher than the alternatives because it is a social service. He urged the Federal Government to give social consideration to the issue, noting that the project would deliver economic and social benefits.
“The rail service is supposed to feed into the mass transit programme of the Federal Government. We cannot have a situation where rail would be more expensive than road transportation. The lower part of the ladder is supposed to feel the impact of the service. The social aspect of pricing has to be given due consideration,” he added.
Chief Executive Officer of West Atlantic Cold-Chain and Commodities Limited, Henrii Nwanguma, said that passenger, unlike cargo, services are subsidised all over the world. According to him, there is hardly an economic justification for passenger lines as freight is the major factor for final investment decision (FID) on heavy-duty rail lines. He hoped that the government would understand the logic.
Director of Railway Roundtable, Olawale Rasheed, rationalised the project, saying that rail transport would change the face of transportation, as many commuters would want to go for the option, given its promise of comfort.
On why the country cannot subsidise the service like what is obtained in other climes, Olawale said the government was constrained by the need to service and offset the loans used to execute the projects.
The pricing, according to him, should not be an issue, as people should rather focus on the benefits, given the challenges on the roads. He said Nigerians should be rather bothered about the ability of NRC to manage the lines.
Another railway expert, Roland Ataugba, said Nigerians had a more demanding responsibility to monitor and ensure that the government honoured the loan terms, as the facility was not a ‘gift’ to the country.
Dean, School of Transport, Lagos State University (LASU), Prof. Samuel Odewumi, attributed the high charges to the need to comply with social distance protocol, suggesting that the fare could reduce when humanity eventually conquers the coronavirus pandemic. He said the fair could drop by as much as 50 per cent when that happens.
Reacting to the call for fare reduction, the Lagos Railway District Manager of the Nigerian Railway Corporation, Jerry Oche, urged Nigerians to patronise the train and experience it first. He said the rail coaches were not comparable to vehicles as they are more comfortable. He argued that the charges were in ranges, just so that everyone would be able to make a choice.