FEATURE ARTICLE

Thursday, July 22, 2021
okerekeoc@gmail.com

TOWARDS SUSTAINABLE TRAIN OPERATIONS BY THE NIGERIAN RAILWAY CORPORATION (NRC)

ost of these local contractors can be likened to 'commission agents' and considering them for such projects is tantamount to signing the death warrants of Nigerians." This was according to the Minister of Transportation, Mr. Rotimi Amaechi, as published July 11th on Nigeriaworld. He explained that local contractors failed to meet some prerequisites, such as five years' experience in rail construction.

Speaking on the poor remuneration and welfare package of staff members of the NRC, the Minister admitted that the corporation ranks least among other agencies in his ministry. He pledged an upward review of the same as quickly as possible.

On July 10, he blamed the incessant breakdowns of locomotives on the Abuja-Kaduna on lack of spare parts to replace worn-out parts. He went on: "We have written to Mr. President on this issue and he has graciously approved the purchase of spare parts for the Lagos-Ibadan trains. "Very soon, enough spare parts for the Lagos-Ibadan rail will arrive the country. By the time this occurs, we will use some of these parts for the Abuja-Kaduna and, hopefully, the issue of incessant breakdown of the trains will be resolved."

Minister Amaechi further added that the failing trains were those bought in 2016, noting that they had worked optimally until now.

In discussing the sustainability of train operations, his statements, as presented above, need to be examined and may be collated into three topics, as follows:

  • Rejection of local entrepreneurs on rail construction projects

  • Train failures and procurement of spare parts

  • Upward review of remuneration of Railway staff and engineers

The objective of this article is to make some suggestions on how to achieve sustainability of industrial plants which we import into the country. From my experience as an engineer with thirteen years of hands-on industrial experience in Nigeria, and over thirty years as an international consultant, it is counterproductive, ill-advised and indeed a questionable use of national resources for a nation to keep importing industrial plants and equipment without any guarantee of their long-term sustainability. This is in spite of a history of long list of failed and abandoned large and costly public projects.

Moreover, the thrust of this write-up is to make suggestions on efforts that should be made to establish a structure which will help ensure that the costly industrial plants that we import into this country can be made to generate income and employment within their planned lifetime.

Sustainability of our train operations should be the goal, the minister's statements will be analysed to determine how much they facilitate achieving sustainability. A discussion of our national industrial problems that engender plant failures, and suggestions on how to contribute to the resolutions of the problems, are presented.

Analysis of the Minister's statements

Rejection of local entrepreneurs: His reasons for not considering local entrepreneurs in railway construction projects necessitate a look at the Local Content Act. The Act was enacted to promote indigenous participation in the Nigeria's oil and gas industry for the purpose of improving the economic and social wellbeing of those engaged in operating in the oil and gas industry. It is highly probable that it is applicable in other industries, including construction. However, I wish to present a brief real-life case which possibly demonstrates the correct application of the Act and its benefits.

An Application of the Local Content Act

In September 2002, my company, Total Technology Consultants limited, was picked to work with an Australian company on a project for software implementation and training by a large multinational in the oil and gas industry. We could not have been given the contract because we did not have the knowledge nor experience but were picked to promote participation by an indigenous company in the contract.

We jointly worked on three projects from September 2002 to July 2004. On the third project, the contract was awarded to us, and the Australian company worked under us. After that project, going forward from 2004 to 2009, we worked alone. The multinational approved our working alone following the statements of one of their expatriate specialists who monitored our performance in the three days of the first course we organised and gave us an excellent report.

The lessons, from this case study, include the following:

  • Nigerians may not be experts from the beginning, but they need to be attached to projects for them to learn from the experts. With time, they will develop competence and expertise.

  • Foreign experts, working alone without Nigerians is a disservice to our country. Nigerians may not start building trains but they will learn much that should enable them to contribute to repairs and other operations of trains. This will happen if they are attached to the foreign experts.

  • Just for the records, in 2004, my company became a partner of Primavera Systems Incorporated; the US company that produced the software products which we implemented. We started representing them in 2004 in Nigeria while the Australians represented them in Australia, and their company was a partner of the company many years before the project.

  • We sold and implemented their products, conducted training for customers, supported and maintained the implemented solutions. Such an arrangement is necessary for technology transfer as can be seen from our experience. We are the face of the company that that customers see. Calling partners "collection agents" is being cynical and trivialising an important industrial practice that is accepted as a necessary relationship in relevant industries in both developed and developing economies.

Train failures and procurement of spare parts

The minister explained that incessant breakdowns of locomotives on the Abuja-Kaduna were caused by lack of spare parts to replace worn-out parts. He said that they had written to "Mr. President on this issue and he has graciously approved the purchase of spare parts for the Lagos-Ibadan trains." He stated that: "Very soon, enough spare parts for the Lagos-Ibadan rail will arrive the country…. we will use some of these parts for the Abuja-Kaduna and, hopefully, the issue of incessant breakdown of the trains will be resolved."

It is relevant to comment optimistically, that it should not be the case that each time spare parts are needed; the President will be written for "gracious approval" of the purchase.

It is also not realistic to suggest that when the spare parts are used, "hopefully, the issue of incessant breakdown of the trains will be resolved". In the real world, replacement spares do not last for ever. They will also fail in use after some time. Moreover, other failures could occur, and not just the ones replaced with those bought by the "grace" of presidential approval.

In effect, this procurement procedure cannot stand as the standard practice for sustainable resolution of every conceivable train failure. The trains had been in operation since 2016, yet they cannot buy their spare parts but have to depend on writing to the president for his "gracious" approval.

Upward review of Railway staff and engineers

It certainly makes business sense that staff members should be paid competitive salaries. After my National Youth Corps Service (NYSC), as a young engineering graduate, I was one of those employed and given excellent training in thermal power generation, both locally and overseas, by the National Electric Power Authority (NEPA) in 1976-77. On our return in February 1978, we participated in the commissioning and operation of the 6 x120MW, NEPA Power Station, Ogorode, Sapele.

I personally enjoyed the experience, as many colleagues did. But sadly, we could not be retained because of poor conditions of service. Our managers could do nothing about it because salaries came from the headquarters and the ministry.

It is therefore necessary to provide competitive conditions of service in order to retain well trained staff. It is an important contributor to sustainability of operations. But where will the money come from?

Problems that militate against sustainable industrial operations including the operations of the trains.

Various Nigerian governments over the years have imported the then prevailing modern industrial equipment and facilities into our country. Within the past sixty or more years, projects of the then ultra-modern power stations and steel plants, among other industrial facilities, had been implemented, commissioned and put into operations. Following the failure of parts which could not be procured, it became impossible to keep the industrial plants in operation. This led to the failure and abandonment of many commissioned industrial plants just about four years after being in operation. This has caused much loss of revenue and made our country's industrial landscape to be littered with a lot of defective equipment and facilities in various stages of disrepair resulting from failed and abandoned projects.

I would refer us to the book: "Achieving Successful and Sustainable Project Delivery in Africa", published in 2020, by Routledge, Taylor and Francis Group, New York, written by Dr. Okoro Chima Okereke. Chapter two, with the title: "Examples of failed projects in Nigeria" contains an in-depth research of failed major industrial and scientific projects in Nigeria. It also contains suggestions on how to minimise the failures. I shall feel free to quote from the book in this article.

In the same vein, Professor Ayo Olukotun in his article: "Abandoned projects and state decay", wrote that a former Director-General of the Federal Government Bureau of Public Procurement, Emeka Eze, in October 2016, stated that there were 19,000 projects in various stages of abandonment.

Why do our projects fail?

Reasons for failure include the following:

  • It has been the experience that new public industrial plants appear to be generally implemented without any planned forecast of income generation from the project deliverables. These deliverables could be a government electricity generation plant, a steel production plant, a petroleum refinery, or any other government industrial plant, each of whose project is planned, completed, commissioned and put into operation.

  • Yet, there is no arrangement to ensure that the revenue they generate will be adequate to fund the operations of the plant, the project deliverable.

  • Such revenue is required to pay salaries, buy raw materials and spare parts, pay for the cost of maintenance and replacement, etc. For example, between 2010 and 2017, the Federal Government, budgeted $66 million for the steel companies out of which $62 million was used to pay salaries. The government kept allocating budget to pay workers' salaries to such companies which should have been able to generate fund for their operations but could not do so. The large industrial plants failed and were abandoned for many years. Some of the steel plants were reactivated in 2018 and 2019 after over ten years of abandonment. Again, this is discussed in the book.

Personal experience- Failure of Delta Steel Company

It is counterproductive, ill-advised and indeed a questionable use of national resources for a nation to keep importing equipment without any guarantee of their long-term sustainability. This is in spite of a history of long list of failed project deliverables and plants. I consider this project procurement practice reprehensible because of the bad experiences which I had in working on projects in our Federal Government owned companies. As a chief engineer and the head of Control, Instrumentation and Computer Systems Department, I had the responsibility for engineering management of automation systems in the Delta Steel Company Limited, Aladja, Warri, Nigeria, 1984-88. Therefore, I had a first-hand experience of the problems created when project deliverables that cannot be sustained and supported through their planned lifetime are imported and implemented in the country.

They fail in a few years and become abandoned. The costly and magnificent Delta Steel Complex, which was reportedly built at a cost of $1.2 billion, was abandoned because of the unsustainable costs of keeping it in operation. In this case, it was not just maintenance costs but also poor and inadequate generation of income. The federal government was constrained to privatise it and it did not fare any better with the new managers. It was abandoned for years before being acquired by new owners who have been trying to restore some plants of the complex to production. It is now called Premium Steel and Mines Limited.

Suggestions for Sustainability

The core of the problem of sustainability of project deliverables, in this case operations of the trains, and other industrial project deliverables, is that they should be commercially and financially independent, and competitive throughout their planned lifetime.

The initiators and owners of the new trains or project deliverables should plan and execute their projects such that in operation, they will compete successfully in the marketplace. They should earn income to pay their workers, fund their operations and maintenance, provide profits and other planned benefits for their stakeholders.

The practice of funding by government to ensure the survival of their project deliverables, which are produced to operate commercially, should be stopped because they are not sustainable, encourage lack of discipline, and questionable use of public fund and resources.

Companies and their project deliverables should be planned to survive independently and respond to the demands, pulls and pressures of market forces. They will succeed if there are serious efforts to achieve appreciable return on investments in the planning and implementation of the train projects.

Our national budgets may not have been properly developed as business plans in our countries' development plans. A business plan does not just belong to the private sector. It is a plan to be used by every commercial enterprise whether government or private. The laws of market forces apply to all commercial deliverables from the public and private sectors. Therefore, if we engage in commercial enterprises in the public or private sector without due considerations of the checks and balances of market forces, we shall be penalised.

The penalty could be the case that we cannot operate the commissioned deliverables because we have not planned for and provided money for them. In such a case, the project may end up being abandoned, as has been the experience with thousands of projects and project deliverables in our country over the years.

Way Forward - Companies to be free from control of government and politicians.

Failure in governance is majorly contributory to the failure of public-owned industrial companies. Chapter 11 of the book on "Achieving Successful and Sustainable Project Delivery" has the title: "Failed Governance, majorly contributory to failed projects in Africa". It is worth reading because it has examples of real-life cases to buttress its points.

It is clearly the case that the public industrial companies should be made independent of government control. We are all Nigerians and observe that most large companies run by Nigerians in the private sector succeed while most large public companies tend to fail. One of the differences between successful private companies and the public companies is independence and freedom from government control. Their boards are appointed by shareholders who are stakeholders and not by politicians who have no stake in the companies and contribute to the poor governance of the companies.

We can also learn from other public companies overseas which are free from government control. An example of such a successful arrangement of a government organisation being completely free from government control is the Temasek Holdings Limited (THL) of Singapore.

It is observed that success achieved by parastatals in Singapore, for example, could be traced to capabilities of the board of THL. It is reported that:

  • "The best person (is given) the job, notwithstanding the person's background and nationality;

  • There are "high calibre of people on the board and the strength of people in-charge of parastatals".

  • The Singaporean government has been able to achieve this success through Temasek Holdings Limited (THL). It is owned by the government and yet independent of government control. THL supervises Singaporean parastatals and helps them to succeed in order to maximise social benefits for the Singaporean nation.

Can we in Nigeria replicate a large corporation that will control all public parastatals? Whether or not, the suggestion is clear that local industrial companies should be free from control of politicians and the government. This should help guarantee that there will be discipline, honesty and integrity in their governance which will majorly determine the success or failure of the large capital-intensive projects and their deliverables. We should involve the private sector, right from conception of the project so that a business plan can be developed. This will contain projections and plans for funding of the project, revenue generation by the project deliverable, and expenditures for plant operations. These can be planned for in advance and efforts made to achieve them.

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