GE’s $5bn investment set to revolutionise rail operations in Nigeria

General Electric (GE) which has emerged the preferred bidder for the Nigeria Railway Corporation, plans to invest $5 billion over the next 30 years to upgrade rail transport in the country.
“We will be spending about $5 billion over the next 30 years. But most of that spend will be front loaded in the first five years, to upgrade the coaches and the rolling stock, as well as in manpower development”, said a source familiar with GE plans.
Authoritative sources in the Federal Ministry of Transportation had said the US company was among the five bidders which applied for the concession deal and were scrutinised to assess their technical and financial competence to upgrade, operate and manage the narrow gauge railway lines for a period of not more than 25 years.
The concession which was granted through an Open Competitive Public Bidding process, is in line with the Federal Government’s objective and in compliance with the requirements of the Infrastructure Concession Regulatory Commission (Establishment Act 2005).
The total length of the narrow gauge system is approximately 3,500 kilometers. The Lagos to Kano rail line network, including all branch lines along the Western line, is approximately 1,800 kilometers, while the Port Harcourt to Maiduguri rail line network, including all branch lines along the Eastern line, is 1,700 kilometers.
Sources in the railway industry say the biggest challenge faced by GE, is in manpower, which is absent after more than 30 years of lack of railway services in the country. GE therefore plans to invest significantly in manpower development and capacity building in the sector, to bring it up to date with modern trends in railway operations.
“You know in modern railway operations, timing and consistency are critical. Check out train schedules around the world, when it says that a train will arrive at 4.57 pm. It will arrive exactly at that time. It takes a lot of discipline and consistency and even attitude, to make that happen. GE will have to invest significantly in capacity building over the next few years, to create a similar consistency and reliability here in Nigeria.”
Informed sources told BusinessDay that the Federal Government would be required to invest about $1.2 billion upgrading the railway tracks to the standard that is required for GE’s concession to take off.
“GE will bring the locomotives and all that is needed to run the railway lines. But the tracks belong to the Federal Government and so they are expected to upgrade it.”

It is understood that the tracks currently have the capacity to do about 20 to 25 km per hour but GE hopes to take the speed to about 50 to 54 km per hour and also eliminate stoppages and breakdowns on the way, to deliver a timely and reliable train service.
GE won the concession for two lines connecting cities in northern Nigeria to cities in the south.
The concession is a significant breakthrough for the country, which has been looking for partners to overhaul its ageing railway system, built mainly during the British colonial rule before independence in 1960.
Economic growth in Nigeria has been held back for decades by the dilapidated road and rail networks.
The concession will cover about 3,500 km (2,200 miles) of existing narrow-gauge lines, from the southwestern commercial capital, Lagos, to Kano in the north, and south-eastern oil hub Port Harcourt to Maiduguri.
The only bid led by GE, was in partnership with Transnet of South Africa, Dutch-based APM Terminals and China’s Sinohydro Consortium.
It would be recalled that upon invitation for expression of interest for concession of the Nigerian Railway Corporation narrow guage rail lines, the Federal Government outlined a number of mandatory requirements to be met by interested applicants.
Some of the requirements are that the preferred bidder must have a minimum net worth of $1billio at the close of the preceding financial year, and technical competence not only to provide rail operations in an emerging market economy.
Such concessionaires are required to maintain existing infrastructure and provide rolling stock fleet to adequately meet the demand of train operations.
The bidders must possess local and international experience in financing, engineering, rehabilitating, operating and maintenance track experience, as well as track record in freight and passenger rail services operation.

 

MIKE OCHONMA