Revenue surged in Q1, despite passenger decline
Nigeria’s rail transportation system maintained a steady growth in revenue over the last year, recording a total of N2.3 billion between April 2020 and March 2021. Data released by the National Bureau of Statistics (NBS) revealed that the revenue was generated from passenger and cargo movement across the country.
However, the revenue from cargo is a miniscule part of the total revenue, indicating that the country is yet to fully explore the rail system for cargo movement. According to the NBS data, a total of NN2 billion was generated from passengers movement in the 12-month period, while cargo revenue stood at around N300 million. An analysis of the data showed that the Nigerian Railway Corporation generated N387 million in Q2’20. In the third quarter of the year, the revenue stood at N465 million, while the corporation generated N482 million in the fourth quarter of the year. In Q1’21, the revenue from rail transportation surged to an all-time high as the corporation recorded N927 million in the period.
The increase in revenue was in spite of a decline in the number of passengers compared with Q1’20. According to the NBS data, the number of rail passengers in Q1’20 stood at 647,055, the volume of goods transported was 18, 484, while the revenue generated in the period was N698 million. But in Q1’21, the number of passengers that used the train was 424,460, while the volume of goods transported stood at 10,511, both far lower than what was recorded last year but with higher revenue. Analysts said the increased revenue may not be unconnected with the automation of the ticketing system for the rail transportation, which was launched in January this year.
The Minister of Transportation, Rotimi Amaechi, also confirmed this recently, declaring that the government’s decision to introduce the electronic ticket has increased monthly profits from around N70 – N90million to N120million, or an estimated 33per cent. “Before the introduction of the e-ticketing we were making N70- N90 million profit after costs have been deducted, now we are generating about N120 million,” Ameachi said. Meanwhile, the Railway Property Management Company Limited, a wholly-owned subsidiary company of Nigerian Railway Corporation, last year said it had generated about N1.4 billion representing 91.5 per cent of N1.5 billion which was the revised approved revenue target for 2020. According to Ameachi, the government has seen a huge benefit in introducing the e-ticketing system.
The NRC targets revenue of N5.3 billion in 2021 and much will depend on what it generates from the Abuja-Kaduna railway line. “In one or two years we will be able to pay back the company that funded the electronic ticketing,” the minister said. The Nigerian government launched an e-ticketing solution for the Abuja — Kaduna rail line in January. Ameachi had said the initiative is a Public-Private Partnership (PPP) valued at N900 million. The amount is provided by the concessionaire, SecureID Solutions, which will run the system for 10 years to recoup its investment before handing ownership back to the Nigerian Railway Corporation (NRC).
The government said the initiative will address numerous complaints by commuters about ticket racketeering, according to a statement from Eric Ojiekwe, a spokesperson for the transportation ministry. “We have not broken even yet but we are making more profit,” the minister said. According to Amaechi, a government does not always pay back loans on railways from the revenue generated, but while it augments revenue, the government usually finds a way to pay the debt.