Concession as the Way Forward for Railway Sector



After decades of failed efforts by the federal government to have an efficient rail system, introducing a concession programme in the sector remains the only option at a time of economic recession, writes Francis Ugwoke

The importance of rail services cannot be over-emphasised particularly in a country heavily populated like Nigeria. This explains the various efforts made by every administration to develop the rail system. The past administrations did their best in this regard. One can recall that the move to modernise the rail system started in 2006 when Nigeria signed an agreement with Chinese construction giant, Civil Engineering Construction Corp (CCECC). First, it was to construct a standard gauge for the Lagos-Kaduna rail way at the cost of $8.3 billion. The agreement with CCECC involved an upgrade of the whole rail system for a 25-year period, covering Port Harcourt-Kano , Lagos-Calabar line.

This project was first started by former President Olusegun Obasanjo in November 2006 with government expected to pay $2 billion to the contractor. By the time Obasanjo left office, it was not clear as to how much his administration paid. Reports have it that the administration may have paid only $250 million, which was not enough. For his predecessor, late Umaru Musa Yar’Adua, it was a different ball game as he was said to have frowned at the cost of the contract and went for renegotiation during which there was an agreement on rehabilitating the existing narrow gauge lines with 2011 completion date in mind. But the death of Yar’Adua stalled the project.

Former President Goodluck Jonathan who took over the project tried his best but again did not complete as at the time he left office. President Muhamadu Buhari had on taking office regarded rail as a top priority project, and to some extent has made some progress with the Abuja-Kaduna railway project. The Transportation Minister, Rotimi Chibuike Amaechi, had recently taken a test-ride with some officials from Idu Main Station to Kubwa in Abuja.

Amaechi had described the completion of the project as part of the efforts towards reviving the rail transport in the country. This has been the reason for other rail projects that are currently on-going in the country. But, it is clear that government cannot carry out the rail project alone without involving the private investors, this explains why the government has opted for concessioning of the rail project, a development that received the blessings of many Nigerians.

Concessioning Rail Services

Concessioning has become a global option and every country is keying into it. For Nigeria, there cannot be a better option if the rail system is to work properly. The last option is coming after series of negotiation between the present administration and the interested investors. Recently, the Federal Executive Council (FEC) approved the plan by the Ministry of Transportation to concession the rehabilitation of the Port Harcourt-Maiduguri and Lagos-Kano rail lines to General Electric (GE), a United States corporate giant. The Port Harcourt-Maiduguri rail line would start from Port Harcourt, through Aba, Umuahia, Enugu, Makurdi, Jos, Gombe, Bauchi to Borno. The other one, which is the Lagos-Kano line would depart from Lagos to Abeokuta, Ibadan, Ilorin, Kano, Funtua, Zaria and terminate at Kaura Namuda.

Amaechi had explained that with the approval, experts from the government on the project would sit and negotiate on the concession.

He added: “We are rehabilitating at no cost to government the Port Harcourt-Maiduguri line, which includes Port Harcourt, Aba, Umuahia, Enugu, Makurdi, Jos, Gombe, Bauchi to Borno. Then the Lagos to Kano line will include Lagos, Abeokuta, Ibadan, Ilorin, Kano, Funtua, Zaria and to Kaura Namuda. We are rehabilitating all of them”.

He stated that GE was expected to do everything required from rehabilitation, investment and other auxiliary railway infrastructure. For doing this, GE has proposed to manage the rail lines for a period of 25 years during which it will recover its investment, a proposal that government is yet to approve. Amaechi disclosed that the federal government advisers will have to sit with the GE to be able to agree on their proposal.

Apart from the concession to GE, the federal government is equally discussing with China, and has provided the counterpart funding for the building of standard gauge Lagos-Kano railway. The Transport Ministry had disclosed that government had signed two deals worth about $5 billion with CCECC to modernise and build railways in the north and south.


The project when completed will be a lot of relief to many Nigerians from all parts of the country. Unlike road transport, rail services have a lot of advantages. It is one system that is capable of addressing the nation’s transport needs considering safety and cost, not to talk of the capacity of trains to carry as many people and goods as possible in a single voyage.

Amaechi had also outlined the benefits when he said, “While the Port Harcourt to Maiduguri line is currently moving nothing, but we are anticipating 11 million metric tonnes that can be moved from Port Harcourt to Maiduguri. So the rehabilitation will encourage the movement of cargo and passengers.”

He said the narrow gauge rail line will assist in the areas of moving agricultural produce, mines and steel and extracted minerals to many parts of the country. He added that, “It is essentially to encourage freight movement. We have over 30 million metric tons of freight on the Lagos-Kano route, of which presently we are moving slightly above 100 metric tons.”

Stakeholders on Rail Services

Freight forwarders who spoke to this writer described the efforts of the present administration in rehabilitating the rail services as very important. A maritime lawyer, Mr Emma Ofomata, said rehabilitating the rail lines as being planned by the federal government will take away a lot of stress from Nigerians.

According to him, “With the current economic hardship, many Nigerians are looking for easy ways of transportation. The rail lines will help in movement of goods and passengers from one part of the country to another at reduced cost and risk. There have been cases when containers being moved from one part of the country to another through the road are vandalised when there is accident on the road. A good rail system will stop this problem.”

Ofomata also said that an effective rail services will help in addressing the gridlock in Lagos. According to him, “an efficient rail service will end the nightmare we have here in Apapa. The containers can be moved to Ikorodu area from where the owners can go and take them, and this will reduce the current traffic we have on the road leading to Apapa.”

Ofomata advised government to take the ports into consideration in its rail system, adding that there should be more investment in rehabilitating the rail infrastructures in the port areas so that the trains can take as many containers as possible out of the seaports on daily basis.