Thursday, 17 April 2014
Modernizing Rail Transportation In Nigeria – A Practical Road Map By Victor Olapojoye
Against the backdrop of what, for the umpteenth time, appears to be an effort on the part of the Federal Government to modernize our moribund rail transportation system, I am compelled to, once again, present a summary of a plan that was presented to the Ministry of Transport about 3 years ago. What is so disconcerting is that 3 years after this plan was presented, and obviously jettisoned by the Ministry, it does not appear like anyone in government has a better plan.
I also sincerely believe that the proposed “Nigeria Railway Corporation (Repeal and Re-enactment)” Bill of 2008, currently in the Senate, is a sheer waste of time, because it essentially allows NRC to retain monopoly of rail transport business in Nigeria. If it is not obvious to the people in Abuja, at this point, that there is no way NRC will be able to effectively manage the entire rail transportation system, just like NEPA was unable to effectively manage the entire power (electricity) system, then I think we’ve got a bigger problem to contend with. Link to the current bill in the Senate http://www.nassnig.org/nass/legislation2.php?search=railway
Here again, is a summary of the proposed road map.
Guiding Principles of the Plan
Having a full understanding of the various processes within the rail transport system and the need to spread investor risk across the entire rail transport sub-systems is central to attracting private investment in rail transport.
Understanding that developing and empowering the sectors that support each of the processes is crucial to having a rail transportation system that is profitable, self sustaining, safe and secure.
Profitability and reduced bureaucracy are central to attracting private sector involvement in the Rail transport system.
The monopoly currently enjoyed by the Nigerian Railway Corporation creates an insurmountable burden on the corporation and compromises its ability to run an effective rail transportation system in Nigeria.
There is an urgent need for an effective regulatory framework that considers modern-day realities regarding rail transportation, for an effective system to be put in place.
Highlights of the Solution
The solution calls for the enactment of the Railway Modernisation Act. The proposed bill will seek to unbundle the current Nigerian Railway Corporation into the following units/services:
Rail Road/Track construction and maintenance services;
Train engine/locomotive services
Wagon/rolling stock services
Railway technology services
Facility management services
The proposed law will seek to establish the Nigeria Rail Transport Regulatory Commission (NRTRC), under the Ministry of Transport, to act as the regulatory body for rail transportation in Nigeria.
The proposed law will also seek to establish the Nigeria Rail Road Corporation (NRRC) from the current Nigeria Railway Corporation. The NRRC will primarily be responsible for maintaining existing rail roads/tracks and building new ones through public-private partnership arrangements. The NRRC will also be responsible for securing the entire rail infrastructure.
The Way Forward
The Nigerian Railway Corporation should undergo an orderly winding down of its operations, by unbundling its entire operations into five units/services. The process should be supervised by the newly created Nigeria Rail Transport Regulatory Commission. The old NRC should be unbundled into the following units/services;
Rail Road Services
NRRC should continue to maintain existing rail tracks and other rail road infrastructure, including signaling. NRRC should also be empowered to construct new ones through viable PPP arrangements, under strict supervision from the Nigerian Rail Transport Regulatory Commission. NRRC and its private sector partners will sustain themselves by charging rail transport operators for the use of their tracks.
Train Engines/Locomotive Services
The current fleet of NRC train engines/locomotives should be sold to private investors interested in operating these train engines/locomotives. While private sector actors operating these locomotives will pay the NRRC and its partners for the use of the tracks, they will in turn charge rolling stock/wagon owners for the use of their locomotives to push or pull the wagons.
Private sector investors should be allowed under the proposed law to purchase/lease additional locomotives to satisfy demand for their services. While charges should be determined by prevailing market forces, provision should be included in the proposed law to protect wagon owners from exorbitant charges, which may be passed on to final consumers, such as train riders for passenger trains, and petroleum marketers for petrol tank wagons.
The current fleet of NRC wagons should be sold to private investors interested in operating the rolling stock. While private sector wagon operators pay locomotive operators for pushing or pulling their wagons, they will charge the final consumers for the use of their wagons. Charges should be based on prevailing market forces, but provision should be made in the proposed law to protect final consumers from exorbitant charges.
Railway Technology Services
Railway technology service companies should be allowed to provide railway technology services to operators across the entire rail transport infrastructure, including rail road, locomotive, wagon, and facilities operators. The outsourcing model should be utilized in incorporating these services into the rail sector.
Rail Facilities Management Services
Investors in this sector will be responsible for constructing and maintaining secondary rail transportation facilities, such as train terminals and stations. Rail terminals and stations currently owned and operated by NRC should be sold to interested investors. Rail facility operators working with Rail Road/Track operators will determine the need for construction of new terminals and stations.
Operators in this sub-sector will also be responsible for providing proper signage at their facilities.
Terminal and station operators will recoup their investment by letting out concession spaces at their facilities, and also charging the wagon owners for the use of their facilities.
Proceeds from the Sale of NRC Assets
The proposed law should stipulate that proceeds from the sale of NRC assets should go into the Rail is the Road Maintenance Fund, to be created by the law. Monies in the fund should be used by the newly constituted NRRC, for the maintenance of Rail Roads/Tracks. Additionally, an agreed percentage of the total annual appropriation for the rail transport sub-sector should go in the Fund.
What this bill achieves is the opportunity for mass investment in rail transportation. This bill, if properly implemented, finally allows private sector investment in rail transportation. The inability of private investors to participate in rail transport business is the real reason why road haulage transporters have always been suspected of sabotaging rail transportation.
This essay is essentially an outline and does not in any way pretend to be a complete plan. But, these principles should guide the implementation of the proposed government railway reform agenda, because this MONOPOLY must end.