15 September 2019

https://www.facebook.com/watch/?v=2370722563038906

Comments:

See how we go wrong with railway planning?

A business plan for Abuja- Kaduna based on 300 passengers per day  would not ordinarily  appear credible or sustainable. Shows they were not thinking of recovering the costs from the get go. 

A traffic count estimates the potential no. of passengers on a given route. Not the no. of passengers your coaches can carry.

A commercial operator approaches planning in a different way. He first asks himself,  how many passengers does he  need to carry to break even on this route? The traffic count will help establish if those  passengers are available on the route given the footfall and the competitive environment. The next question will be, how many coaches and locos does he need to meet that demand? That way he works out his capital and operations costs and sets tariffs. He also assesses his funding/financing requirements. This is elementary business planning. The same kind of decisions that any business would make daily to enable it stay in business.  This enables a procurement plan that is deliberate and strategic in the planned  introduction of new  equipment not the knee jerk resort to adhocism as only our govt knows how. 

Abuja-Kaduna probably costs about N500k per trip for fuel and lube alone. By the time you factor in cost of  personnel and other consumables like spares and make provision for  maintenance and depreciation of fixed and moving infrastructure, you should easily be chalking up N700k per trip. On average, they take in N300k per trip officially, though with all the racketeering, they are probably taking in about N400k +/trip and short changing govt of the difference. Notwithstanding, we are all subsidising that service by up to N1-2bn a year due to the inefficiency of the operator.

The bottom line is government is not configured to think like a business, so why does it insist on occupying the space?

In the video, the HMT talks about just one dmu of 10 coaches arriving for Lagos-Ibadan in November. That tells you they haven’t learnt from the Abuja-Kaduna fiasco and may be planning on replicating that passenger congestion/confusion on Lagos-Ibadan. This is a line like no other that can probably move at least 250,000 people a day from the start and up to 1,000,000/day by the end of the first year if we are serious because the demand is there. A serious commercial operator will start off with about 20 dmus i.e. 200 coaches, to drive up traffic over time. Not the kind of mediocre thinking on display here. Anyway, don’t expect Lagos-Ibadan to be ready until well into 2020 if not beyond.

To cap this all is the news that ICRC has approved the concessioning of e-ticketing for railway. Now, what is that? They should rather be concessioning the operations rather than just ticketing. Notwithstanding, it is unlikely to stem racketeering and collusion with/by the NRC operatives unless steep service level agreements incorporating/specifying max. service downtimes and min. performance thresholds are built into the arrangements. It’s not rocket science but watch them make a right mess of it. If it’s the NRC that will manage the concessionaire as grantor, then I won’t hold my breath about racketeering. Mind you, ticket racketeering did not start with the Abuja-Kaduna service. It’s been an intrinsic part of the NRC story historically.

Also, we are told that  they are stopping the Warri-Itakpe train service,  but was there ever a real service ? Or was it just noise and propaganda for election purposes as alleged?  That line was not known to be ready yet. No stations, no signals … Nevertheless, starting and stopping train services is not the best way of creating an impression of a reliable service with customers to encourage switching  but that is the “arrogant” way of govt rather than a customer focussed service provider.

Let’s get real. Serious money is being expended on our railways. About $3bn with the Chinese so far, that’s over a trillion naira!. Lets make it count. We need to see real returns for a change. Government can keep building railway infrastructure but the private sector should operate the railway service for us to obtain optimal benefits. We need to see a scaling up of operations like the NRC could never produce and only the private sector can.

No meaningful change will however come about until we pass the Railway and National Transport Commission bills into law.

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