Canadian consultancy firm CPCS is advising the Lagos State Government on the development of its new railway. We caught up with project manager GEORGE KAULBECK.
Getting around Lagos can be a nightmare, but long-suffering commuters have something to look forward to the Lagos Light Railway Project, which comprises the 37km Agbado to Marina Red Line and the 27km Okokomaiko to Marina
Blue Line. According to the implementing agency LAMATA (Lagos Metropolitan Area Transport Authority), the two lines are expected to transport more than 1.5 million passengers per day when they are up and running in 2011. But before those first satisfied customers arrive at work on time there’s plenty to do, including the costly construction of the railways and support infrastructure. Most African railway concessions to date have been for existing railways. This is a greenfield project, says George Kaulbeck, project manager. For the Blue Line alone, we anticipate it will cost in the region of US $800 million to build the infrastructure.
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The two projects are being developed concurrently but separately, although the concessions of the two lines will be jointly marketed. Additionally, the right of way from Iddo Station to Marina, including three eastern stations, will be shared between the two lines. The shared infrastructure (roadbed, structures and stations) will be designed and constructed as part of the Red Line project.
The Lagos State Government (LSG) will foot the bill for the track and stations, possibly financed through a bond issue, but it is looking to the private sector to supply the rolling stock and manage the railways.
Public private partnership We believe this type of partnership between the state and the private sector is the most effective way to allocate risks to the parties best able to manage them, says Kaulbeck of the Blue
CPCS anticipates the winner of the concession will need to invest about $300m in the first three years of the project, mainly on rolling stock. Further investment in rolling stock will be required as dictated by growth in passenger demand in future years. Some investors wonder how likely it is that the railways will be self-financing. Jeff Murphy, Blue Line Financial
Team Leader, says, I think it is fair to say both LSG and LAMATA clearly recognise urban rail systems internationally typically require significant government support and the returns accruing to government cannot be measured in only financial terms.
This doesn’t mean the private sector needs to be short-changed, however. LSG expects to structure and negotiate an arrangement with the concessionaire where it maximises the amount it recoups on its investment while allowing investors to achieve market rates of return says Kaulbeck. Given there is currently only one practical route from Okokomaiko to Lagos Island, demand for the railway is likely to be high. Fares will be set at a slight premium to alternatives. With an estimated end-to-end travel time of fewer than 40 minutes (less than half the time of today’s alternatives), Kaulbeck doesn’t see think higher prices will deter many passengers.
The vision thing Project development in Africa is notoriously difficult. What enabled CPCS and its client to progress so far?
Kaulbeck credits Lagos State Governor Babatunde Fashola with much of the success because of his vision and determination to allocate public resources to transportation infrastructure and his support for the LAMATA.
While the project has mostly run smoothly, Nigeria’s chronic power problems will likely mean the railways will operate with diesel trains. Ideally, railways of this length would be electrified, says Kaulbeck. Although the tender documents will allow scope for the concessionaire to offer an electric solution, Kaulbeck thinks it unlikely. One possibility might be for the operator to generate its own power and sell the excess to the grid, but there would be legislative and regulatory issues to resolve first, he says
