Sharp Decline in Rail Transport Revenue in Q2 2022

The latest report from the National Bureau of Statistics (NBS) on rail transportation shows that the total revenue generated through this mode of transportation rose by 140% y/y to NGN2.2bn in Q1 ‘22 but fell by -37% y/y to cNGN734.5m in Q’2 22. On a q/q basis, the total revenue declined by 67% q/q. The revenues comprise of income from passenger fees, freight, and other sources. The revenue generated in Q2 ‘22 is the lowest income generated by the sub-sector since Q4 ’20. We attribute the decline to the suspension of the Abuja-Kaduna line’s operations because of security concerns. However, based on information gathered from local newswires, the federal government is set to recommence operations on the route in November 2022.

According to the data, the number of passengers increased by 125% y/y to 953,099 in Q1 ’22. This reflects recent investments in the sector.

In Q1 ’22, passenger revenue totalled NGN2.1bn, a 133% y/y increase from NGN893m in Q1 ’21. However, the revenue from the segment decreased to NGN599m in Q2 ’22, implying a decline of 45% y/y and 71% q/q.

In terms of the revenue composition, passenger revenue accounted for 94% of gross revenues in Q1. However, its share of revenue fell to 82% in Q2, primarily because of the suspension of rail operation along the Abuja- Kaduna line.

The share of revenue from cargo was just 3% of total in Q1. However, its share improved to 12% in Q2 because of the decrease in passenger traffic during the quarter.

A total number of 422,393 passengers travelled via train in Q2 ’22 representing a decrease of -25% y/y (-56% q/q), the lowest number recorded in the post-covid era.

Revenue receipts from other income grew by 989% y/y and 14% q/q to c.NGN50m.

Revenue from cargo transportation amounted to over NGN86m in Q2 ‘22, representing an increase of 14% y/y.

Although we expect the declining revenue trend y/y to continue in Q3 ’22, we anticipate an improvement in Q4 ’22 due to the recommencement of operations in November 2022.

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