Cost of diesel exceeds profits by 135.3%

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….NRC halves Warri-Itakpe, Lagos-Ibadan routes

The The amount spent daily to power the trains that operate on the Lagos-Ibadan rail service is 135.3% more than what the Nigeria Railway Corporation earns from ticket sales to passengers, it was learned on Friday.

It was also found that the NRC had to halve the journeys of its Warri-Itakpe and Lagos-Ibadan rail services due to rising diesel prices, as well as the negative impact on rail services caused by the attack of March 28, 2022. of the Abuja-Kaduna train.

NRC Director General Fidet Okhiria told our correspondent in Abuja that although passengers are gradually returning, the March 28 incident not only destroyed the Abuja-Kaduna road but also forced travelers to take the desert railways all over the country.

He said the situation was further aggravated by rising diesel prices which had made it difficult to operate rail services in Nigeria as the NRC was spending more than double its revenue from ticket sales on purchasing of diesel.

He said: “The bombing of the Abuja-Kaduna train on March 28 affected us badly. The Abuja-Kaduna service was working wonderfully. At one time we were reaching 450 million naira per month and by the time you remove all running costs you will still have something to pay to the government.

“But now we can barely buy diesel to operate. In fact, the main headache now is the price of diesel. For example, on average, we use about 24,000 liters per day for the Lagos-Ibadan service and we barely earn up to 1.7 million naira per day.

“Now the cost of supplying a liter of diesel is close to N1,000. At petrol stations you get it for around N700-800, but if you have a supplier they will have to put in their profit margin, VAT and such, bringing the cost to around N1000/litre. So we are talking about spending almost 4 million naira on diesel alone, while we barely earn 1.7 million naira. But we still have to provide the services on this route.

Asked to explain how the NRC was getting funds to support its operations, Okhiria replied, “In the 2022 budget, the government has earmarked about 500 million naira for diesel, which barely lasts up to a month for rail services. Across the country.

“We are also looking for funds from other sources, such as real estate rents and the like. So we use it to augment what we earn from rail services. You see, it was a serious headache, I won’t lie to you. It’s been stressful and NRC owes diesel, but we can’t stop.

Speaking further on the March 28, 2022 incident, Okhiria said it impacted not just the Abuja-Kaduna route but all rail services in Nigeria.

He said: “Before, passengers were confident that the train journey was the safest, but when this incident happened it was a huge blow to the rail industry. It is now that people are trying to rebuild trust. Thus, the volume of passengers has decreased.

“And, unfortunately, the war in Ukraine and other variables have caused the prices of petroleum products to skyrocket. And being a service provider for the benefit of Nigeria, we cannot just wake up and raise the tariffs. Because even when you raise prices, you can price yourself out of competition.

The NRC boss said to reduce losses the company needed to check its operations to maximize what it had without causing pain to passengers.

“So we had to halve the number of journeys on the Lagos-Ibadan and Itakpe-Warri rail services and that is what we continue to do. This is because the income we earn cannot pay for the amount we currently spend on diesel,” he said.

Okhiria added, “We are just trying to get support from other sources to be able to pay for diesel only, not to mention payments for cleaning, security, etc. All these issues are also outstanding and it will take a lot of money to maintain them.

“Lagos-Ibadan trips were up to six in the past and now we should be talking about 10 trips if not for the issues. But now we are doing four trips on this service. On the Warri-Itakpe service, we only do two trips compared to the four trips we used to do.

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