The Federal Government and the China Railway Construction Corporation (CRCC) have signed an agreement for the latter to construct the $3.9 billion Abuja-Baru-Itakpe-Warri rail line.
As part of the agreement, the CRCC will also handle the construction of a new seaport in Warri. The multi-million-dollar projects, upon completion, will be managed by the consortium for a period of 30 years.
Rotimi Amaechi, minister of transportation, made this disclosure shortly after the signing ceremony in Abuja on Thursday.
Amaechi said the development signalled the first public, private partnership (PPP) for the Abuja-Itakpe and Abuja-Baru-Itakpe and Lokoja rail corridor.
“The agreement is supposed to be 15 percent Nigeria and 10 percent CRCC equity and then we borrow 75 percent as SPV (Special Purpose Vehicle). CRCC will provide us with a performance bond from their bank before we give sovereign guarantee. There is a concession agreement that CRCC will hold 75 percent. The entire Nigerian railway is to be constructed 100 percent by CRCC,” he said.
The minister commended the CRCC for its amiable disposition and cooperation with the Federal Government, saying it was for that singular reason that the relationship was being sustained and strengthened.
He said the PPP arrangement was more convenient for government, as opposed to borrowing, which entailed paying back the loan.
He said the rail line, when completed, would be one of the longest corridors in the country, apart from the existing narrow gauge lines.
“If we raise our equity, they will raise theirs. But largely, the funds will come from China,” he said. “The German started it by Julius Berger they got close to completion and it was later abandoned. So some of them were vandalised and then we had to re-award it to CCECC to complete the vandalised areas.”
Meanwhile, Amaechi has made a case for the localisation of railway technology, noting that the history of China railway construction showed that China had localised the American technology.
The first American company that started railway construction in China was GE.
“There is a need to instruct both CCECC and CRCC to realise that we need local participation of both Nigerian engineers and contractors. We need you to work with us to develop the knowledge of Nigerians,” he said.
“Just like we are holding CCECC on issue of local manufacturing, for which we have awarded them the contract of about $500 million to build for us rolling stock for Lagos-Ibadan, we will also resume conversation with CRCC on the issue of manufacturing railway components in Nigeria,” he said.
Earlier, Wang Wenzhong, vice president of China Railway Construction Corporation (CRCC), commended the minister on behalf of the company’s 300,000 staff for reposing confidence in the company.
Wenzhong explained that CRCC remained the biggest construction company of China, and the biggest railway company in the world.
He said in 2018, the company occupied 55th position among the top 500 enterprises around the world and currently, it has businesses and projects in 127 countries of the world, with a turnover of $110 billion.
“We pay lots of attention to the development of Nigeria. We also make use of our best resources in Nigeria. We are going to provide our resources to the development of Nigeria, we also demand our subsidiaries to work hard for Nigeria. We want all our projects in Nigeria to be the best in terms of quality and to meet the satisfaction of the people of Nigeria,” Wenzhong said.
“We have some mega projects like the Lagos- Ibadan railway which has great importance in the development of Nigeria. We also made a lot of efforts for the financing of Ibadan to Kano project especially with some financial institutions of China.
“We hope the Federal Government will take this project as the most priority one and also provide some counterpart funds so that when financing is settled, we will be able to start the project early next year,” he said.
Stella Enenche, Abuja
