More than two years after the inauguration of the $1.5 billion Lagos-Ibadan standard gauge rail, the Nigerian Railway Corporation (NRC) in September finally began cargo haulage on the facility from the Port Complex in Apapa, Lagos State to the Dry Inland Container Port in Moniya, Ibadan, Oyo State.
Former President Muhammadu Buhari had inaugurated the 157-kilometre rail on 10 June 2021 for passenger services and to ease cargo evacuation from Apapa port. The facility was installed to reduce the burden of containers on the roads, as well as congestion at the ports and access routes.
While it started passenger services five days after the inauguration, NRC missed several deadlines for the commencement of the cargo operations due to some setbacks.
The principal constraint was that, as of August 2022, the China Civil Engineering Construction Company (CCECC), the project contractor, had not linked the final track of the rail from Ebute Meta to the quayside of the Apapa Port, where imported containers can be lifted directly from the ship to the rail wagon.
Another major setback encountered by the corporation was with the radioactive scanner building of the Nigerian Customs Service (NCS) which was impeding three of the tracks at the APM Terminal in Apapa.
However, the Minister of Transportation, Saidu Alkali, finally flagged off the freight movement in September on one of the completed tracks. Alkali said at the event that efforts were still being made to remove the NCS building which is still impeding the other two tracks.
Cargo Operations
According to the minister, three coaches of 30 wagons will be loaded daily from the Apapa ports to Ibadan, totalling 90 trips per month, which will increase to nine trips per day and 270 trips per month when they remove the Customs scanner building.
Providing more details, the NRC’s Lagos District Manager, Augustine Arisa, explained that the cargo operates fully via the standard gauge rail which is 1,435 millimetres wider than the narrow gauge with 1,067 millimetres, which connects to Kano and beyond.
Arisa noted that the corporation has plans to extend the standard gauge rail from Moniya to Kano, adding that while one of the tracks is now in use, the other two tracks end at the customs building at APM Terminal, which can function when the building is removed.
APM Terminal Apapa is a shipping company that operates Nigeria’s largest container terminal.
Arisa also noted that the corporation is only in charge of moving the containers after they have been certified by the National Drug Law Enforcement Agency (NDLEA) to make sure they are not moving drugs.
Recently, the Apapa command of the NCS revealed that it generated N676 billion as revenue for the federal government between January and August.
Within the eighth month, the customs seized N21.6 billion worth of tramadol packed in 720 cartons, containing 143.8 million units of 225-milligram tablets and weighing 10.3 tonnes.
Another 20 cartons of illicit drugs valued at N1.4 billion were also handed over to the NDLEA, according to the Assistant Comptroller General of Customs, Auwal Mohammed.
Concerns about double handling charges
However, as of the third week since its commencement, it was observed that the NRC was still struggling to get patronage to meet the daily target. This is because importers are shunning the cargo train services over double handling charges slammed on their cargoes on arrival in Ibadan.
Giving reasons for the double handling charges, the Lagos District Manager of the NRC told our correspondent that the charges are for the intermediaries that help with loading the containers at the port and offloading to the destinations.
“The double handling charges they are complaining about are applicable anywhere in the world because the cargo leaves here, it doesn’t get to the actual factory or destination where it is needed, so there must be an intermediary to take it to where it is going,” he said.
Arisa noted that the only way to avoid the double charges is to have a rail line that connects to the factories like they used to have with Guinness, Flour Mills and Vono.
“It is general everywhere except a situation where the company will ask the NRC depending on the volume of their cargoes, to lay a rail line to their company,” he said.
“If they negotiate and we have such a request, we can now make a rail line that connects directly to their company. Apart from that, we can only move it to where the intermediaries pick and get it to the company.
However, the manager believes that the cargo operations need more awareness campaigns to increase patronage, adding that charges are based on “the size of containers whether it is 1by20, 40 fit or the extra large container.”
Ajanonwu Vincent, the publicity secretary, South West Zone, Importers Association of Nigeria (IMAN), lauded the Apapa-Ibadan cargo rail project. He, however, said that the “double handling charges have been a problem in the port industry – one of those ways the terminal operators exploit the importers and agents.”
Vincent noted that government institutions, like the Nigerian Shippers Council, are responsible for correcting these anomalies and such issues should be reported to them with appropriate documents.
He recalled that research conducted two years ago by IMAN exposed some terminal operators who were engaged in double-handling, adding, however, that their protest did not yield positive results.
Vincent said that the NRC will have to review the double handling charges for the sake of the final consumers.
Decongestions, rail revenue
According to transportation minister Alkali, the movement of containers by rail is part of the government’s effort to decongest the ports and save shippers from the accumulation of demurrages while also facilitating seamless operations at the Lagos ports.
“With the movement of containers from Apapa to Ibadan, we expect the Apapa port to be decongested and our roads to be free of container-carrying trucks,” he said at the flag-off event.
The Apapa port recorded approximately 94 per cent of total Nigerian exports and 64 per cent of imports in the first quarter of 2023, according to the National Bureau of Statistics (NBS).
According to the NRC Lagos district manager, the freight movement will also “boost the country’s economy.”
In terms of revenue generation, NBS’ rail transport data as of the second quarter of 2023 showed that Nigeria earned N1.3 billion for both passenger and cargo services.
Of the total revenue generated in the period, N1.10 billion was received from passengers, while N188 million was received from goods/cargos conveyed in the same period under review.
The report noted that the volume of goods/cargos transported in the period stood at 56,029 tonnes compared to 31,197 tonnes recorded in the second quarter of 2022.
According to the NBS report, a total of 474,117 passengers travelled via the rail system in the same period, compared to 441,725 and 422,393 in the first quarter of 2023.
Reduction in demurrages
According to Mr Arisa, the railway services for cargoes will not only reduce congestion and gridlock in Apapa, but it will also reduce the accumulation of demurrage.
Demurrage refers to the charges that merchants pay for the use of the containers within the terminal beyond the time agreed. This is measured from when the containers are offloaded until they are picked up at the port.
“The more the containers stay, the more the importer pays so much as demurrage. At the end of the day that money they are paying is now translated to the final consumer, another reason for inflation,” Mr Arisa explained.
Recently, the Minister of Marine and Blue Economy, Adegboyega Oyetola, revealed that about 6,000 abandoned cargoes have been lying at Apapa and Tin Can ports uncleared since 2011.
Mr Oyetola observed that some importers tend to abandon their cargoes when the demurrage is accumulated.
The minister emphasised ease of doing business at the ports, noting that Customs must use scanners for faster clearing processes, instead of the physical examination that slows down their operations and accrues demurrage.