IFC sceptical of Nigeria’s $12bn costly investment in standard gauge rail lines

The International Finance Corporation, the private sector arm of the World Bank, says there can hardly be a strong economic justification for abandonment of the narrow gauge rail network by cash-strapped African countries including Nigeria, for the so called standard gauge specification, especially because of its huge cost implication.

Nigeria is already committed to about $12bn in loans and credit from China, which has been contracted to build standard gauge rail lines in parts of the country, at a time the more than 3,500km of narrow gauge network is wallowing in utter neglect.

Africa accounts for an abysmal 3% of the world’s rail traffic, with South Africa that has an entirely narrow gauge system taking 86% of Africa’s share, however, the allure of Chinese loans means that many African countries are abandoning their narrow gauge rail networks for Chinese built standard gauge.

According to Pierre Pozzo di Borgo, the principal investment officer at the IFC, “the argument of higher investment costs, related to rolling stock and track works for narrow versus standard gauge networks is not supported by any empirical evidence.”

He said. “no evidence exists that supports the notion that standard gauge railways are more productive than narrow gauge ones; and rail network productivity is driven mostly by market demand and railway management skills, rather than technical characteristics of rail networks, including their gauge.”

The IFC said it currently costs $3.25m per kilometer of standard gauge, compared to $2.6m per kilometer of narrow gauge, with both capable of carrying the same 60m tones of load annually.

However, if Nigeria were to rehabilitate its current narrow gauge, it will cost only $0.49m per kilometer.

The counsel for Nigeria is that instead of an obsession with migrating to standard gauge, the country should spend its limited cash on rehabilitating its current narrow gauge, upgrade critical skills and set up workshops for the fabrication required to lubricate the network and make it functional.

“Whenever a narrow gauge already exists”, says the IFC, “the economics of replacing it with a standard gauge network is absent. When dealing with greenfield projects, excess cost of standard versus narrow gauge network is still significant. It is exacerbated if standard gauge choice hampers inter connectivity with other networks build as narrow gauge.”

It said, “the only time that standard gauge is technically required is when considering high speed passenger train services, whereby narrow gauge networks cannot accommodate train speed in excess of 180km/h.”

Nigeria has built a standard gauge rail line between Abuja and Kaduna but it runs at less than 50km/h and the country is currently building a standard gauge between Lagos and Kano and another is proposed for between Lagos-Calabar and Port Harcourt. They are all being built through massive loans from China.

In a telephone interview with BusinessDay yesterday, Frank Nneji, Chief Executive Officer, Transit Support Services Limited and keen follower of developments within the rail sector, noted that  it will be a colossal economic loss and counter-productive, to neglect the already existing 3,500 kilometer narrow gauge rail lines because of the standard gauge lines.

He noted that in India, the narrow gauge still serves the critical purpose of moving millions of passengers and cargo.

But Oseme Oigiagbe, a transport analyst, said the narrow gauge rail system poses huge limitations on transport efficiencies for a modern day transportation system by rail. ‘’The advantages of standard gauge far outweigh the narrow gauge in the areas of technology, environment and adaptation to link multi-modal transportation design needs’’.

 

MIKE OCHONMA