The Channels interview with the MD of NRC, Engr. Fidet Okhiria was cringe worthy on many levels. It was as if the $66bn allegedly required for rail infrastructure was someone else’s problem and not his! He offered no assessment of how these sums could be sourced and since he argued that the corporation could not be expected to make any profit, it would appear that he didn’t see it as the corporation’s responsibility to source for the investments. Yet, he is CEO of a railway business? This is the investment that would ensure the survival of his business. So it should concern, indeed trouble him.
On another level, we’d been told by Rotimi Amaechi as minister just 7 years ago that the required investment in railway fixed infrastructure was $16bn but along came Sen Alkali the new minister to say earlier this year, that what was required was $35bn and recently, NRC MD Engr.Okhiria gives the figure as $66bn. The question is, why the inconsistencies? Surely if anyone should know, the Ministers of Transportation and MD of NRC should. So who among them is right?
Without proper contextualisation, it is clear that Amaechi may have been mistaken because the FG’s unfunded commitments to railway fixed infrastructure contracts as at 2017 when he spoke had already topped N20bn. There were contracts for coastal railway at $12bn, Lagos-Ibadan $1.6bn, Ibadan-Abuja $5.2bn, Kaduna-Kano $1.2bn, Kano-Maradi $1.9bn totalling nearly $22bn. He also had Itakpe-Abuja $2.1bn and $18bn Port Harcourt-Maiduguri on the drawing board at the time. So what exactly was Amaechi on about?
Sen. Alkali’s figures also need contextualisation but given that he had just come in, it is possible that there may have been some misunderstanding.
Now Okhiria’s $66bn is perhaps the more accurate figure but may have been presented in a misleading way. First is that it is derived from the railway masterplan aka the 25 year vision for the Nigerian railway system. What Okhiria didn’t tell his audience is that the plan only required government contribution of $3.2bn with the rest of the funding coming from private investors comprising investor equity of $11bn, debt of $26bn and interest payments of $25bn over the 25 years. Government was to provide an operating subsidy to the investors during the first 6 years of the vision of a mere $90m.
So what happened and why is the MD now telling the world in year 22 that the government needed $66bn to achieve the objectives of the 25 year vision? What have they been doing for 22 years? Why is he not giving us proper metrics of achievement rather than a convoluted list of railway lines that leaves the audience confused and unclear about relative progress? Why is he not telling us what happened to the investors who were to fund the $62bn investment required? Why have we been misled into the belief that they were implementing the 25 year vision through the years ?
The truth is that the NRC has never liked any plan that challenged its hegemony over our railways. It has paid lip service to reform but has through subterfuge continued to mislead government and perhaps obstruct genuine efforts at reform and restructuring. It never pretended an interest in the constitution amendment that opened up railways to states. Yet, it is this reform and restructuring that are the necessary condition for attracting private investment.
Nasir el-rufai started the reform effort during his time at the BPE but promptly ran into a brick wall as the vested interests that wanted the status quo preserved were quite powerful. Pres. Obasanjo was however determined to face them down. So he stopped funding the NRC and it promptly went bankrupt.
Nasir left the BPE to the FCT as minister in 2003 but wouldn’t let his successor at BPE, Dr. Julius Bala be, offering a sort of relief for the NRC which was effectively in administration. Obasanjo awarded the Lagos-Kano modernization contract to the Chinese in late 2006 and in the twilight of his 2nd term in office.
The vision had effectively lost 4 years of the programme but worse was that the contract award was not consistent with the vision. First is, it committed government to funding over $6bn of a contract in the vision whereas the government’s total investment in the entire vision was to have been no more than $3.2bn for the entire 25 years! The derailment of the vision had begun in earnest.
Enter President Umar Yar’ Adua in 2007 with Goodluck Jonathan as VP and Diezani Madueke as Minister of an unwieldy portfolio of Transportation with the ministries of Works and Housing, and Aviation all tucked in under her. More intrigues followed around the railway with many then governors including the same Rotimi Amaechi, Bukola Saraki, Babatunde Fashola, Peter Obi, Gabriel Suswan, Namadi Sambo and others prevailing over Yar’Adua to cancel the Lagos-Kano railway modernization contract and share the contract’s budget among the three tiers of government as it was to have been funded from the ECA (excess crude account). The contract was in the end amended to be delivered in 5 phases such that instead of the entire contract comprising about 2,733 track km being delivered in 4 years at a cost of $8.3bn, we have now only supposedly completed 2 of the 5 phases after 18 years amounting to less than 20% of the original scope. Worse is that the scope has also been modified such that we are now getting only about 1,344 track km for the princely sum of about $10bn. So we get half of the original scope for more than the original price perhaps 20 years later as well? That is how inefficient and wasteful we have been in project delivery but I digress.
The NRC found its voice when Isa Bio became Minister of Transport in 2008. It saw a window to lobby for the reinstatement of the corporation with the arrival of a new government, and Yar’Adua obliged them with a further derailment of the vision when he authorised the award of rail rehabilitation contracts on the western line. NRC was back but it had seen no reason to change its ways. It was not interested in reform and continued to lobby intensely against a restructuring of the railway environment. The railway bill and transport regulator bill from the BPE languished for nearly 15 years as a result before arriving at the legislature.
16 years since it was returned to life, the NRC is still not able to fully recover its cost of operations. So all Nigerians continue to pay MD Okhiria to keep him in work for little or no benefit to most of them. Like sinking money into a black hole but most of all is that the NRC hides under this facade of providing an “essential service” and therefore see no need to be profitable. Indeed their sustainability is someone else’s problem i.e. you and I. They project this illusion of being too big to fail. They forget that they have failed twice before and the heavens didn’t fall.
The railway is an essential public utility for enhancing economic development when it works well. It needs to operate efficiently to be effective. It needs to impact the lives of the most people whose commonwealth has been invested in the NRC over the years with little or no benefit. We must return to the drawing board with the vision and revise it. We must reform and restructure the railway environment. We must unbundle the NRC. If we carry on as we are, we may end up where we are coming from The news of intended 2nd reading of the unbundling bill in the Reps is welcome. The Senate also had 2nd reading of a railway amendment bill
Both bills need to be harmonised so that there is consistency of outcome. The executive arm rather than sit on its hands needs to be putting its house in order. It needs to prepare a credible asset register and head count. It needs to be consulting with the unions, sensitising the investment community …. talking to the people about what it all means. It needs to roll up its sleeves and signal where it is headed rather than celebrating a freight train arriving Lagos from the Kano ICD after 10 days, which is mediocre indeed.