FG, China sign $3.9bn Abuja-Itakpe-Warri Rail Contract
by Okechukwu Nnodim
The Federal Government has signed a $3.9bn contract with the China Railway Construction Corporation Limited for the construction of a new Abuja-Itakpe-Lokoja rail line.
The rail line will pass through Baro and have a branch line to Lokoja, the Kogi State capital.
Also included in the contract agreement is the completion of the rail line from Warri Central Station and the construction of the new Warri seaport.
The FG and the CRCC signed the contract on Thursday in Abuja.
The Minister of Transportation, Rotimi Amaechi, who received senior officials of the CRCC at the ministry, stated that with the latest $3.9bn contract, the Chinese firm was in charge of all rail projects in Nigeria.
The over 10-member CRCC officials were led to the ministry by the corporation’s Vice President, Wang Wenzhong.
Amaechi said, “The signing that we had today is the first PPP (Public Private Partnership) railway agreement for Abuja-Itakpe or Abuja-Baru-Itakpe and Lokoja and it is between Nigeria and the CRCC.
“The agreement is supposed to be 15 per cent Nigeria equity and 10 per cent CRCC equity and then we borrow 75 per cent as SPV (Special Purpose Vehicle) from the Chinese bank.”
He added, “Part of the agreement is that the CRCC will provide us with a performance bond from their bank before we give a sovereign guarantee for them to be able to borrow the 75 per cent. And then, there is a concession agreement that the CRCC will manage both the railway and the seaport and recover the 75 per cent and pay the money.”
The minister said the Federal Government had not engaged other companies for railway construction in Nigeria due to its relationship with the Chinese construction firm.
He, therefore, urged the corporation to complete its ongoing peojects across the country on time.
Amaechi said, “The entire railway for now in Nigeria is constructed 100 per cent by the CRCC. I think that the good working relationship we have had with the CRCC is the reason we have not been able to engage other companies.
“I honestly don’t know why we have not concluded the Ibadan dry port. We need to conclude that and get it out of the way. Nigeria is waiting for the CRCC at Abuja to Itakpe and Warri seaport.
“Before the approval at the federal cabinet, the CRCC was pushing us with so much pressure to approve it. We approved it and they are not on site. There is a need for the CRCC to go to site. If we raise our equity, they will raise theirs. But largely the funds will come from China.”
The minister told his guests that there was a need to localise the technology used in the construction of railways, adding that Nigerian engineers and contractors should participate.
He also said, “Just like we are holding the CCECC (China Civil Engineering Construction Corporation) on the issue of manufacturing at Kajola, for which we have awarded them the contract of about $500m to build for us rolling stock for the Lagos-Ibadan railway, we will also resume conversation with the CRCC on the issue of manufacturing of railway components in Nigeria.”
On the Lagos-Ibadan rail project, Amaechi reminded the construction firm to speed up its work as the legal date for the completion of the rail line had not changed from February 2020.
He said, “Literally, all the railway activities in Nigeria are handled by your company. The Abuja-Kaduna that is completed was done by CCECC (a subsidiary of the CRCC) and the Lagos-Ibadan that is nearing completion; I hope they will be able to complete it. We need them to complete it quickly and we have told them that by February, by law the contract would have expired legally. I hope you will complete it before that time so that we commence commercial activities.”
On his part, Wenzhong promised that the CRCC would continue to use its best resources in Nigeria to develop the country, adding that it had ordered its subsidiaries to work hard for the Nigerian people.
He acknowledged that there had been significant achievements in transportation infrastructure under the present government.