FG, Chinese Firm Sign Contract for $3.9bn Abuja-Itakpe-Warri Rail Line

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Rotimi Amaechi
Formar Minister of Transportation, Rotimi Chibuike Amaechi

Kasim Sumaina in Abuja

The federal government Thursday signed an agreement with China Railway Construction Corporation (CRCC) to construct the $3.9 billion Abuja-Baru-Itakpe-Warii rail line, build a new seaport and mange same for a period of 30 years.

The contract was signed by both parties at the Federal Ministry of Transportation in Abuja, where the Minister of Transportation, Rotimi Amaechi, noted that with the latest $3.9 billion contract, the Chinese firm has now been saddled with the responsibility of handling all rail projects in Nigeria.

The minister said: “The signing ceremony 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 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.”

“There is a concession agreement that CRCC will hold 75 per cent. The entire Nigerian railway is constructed 100 by CRCC.”

He explained that the good working relationship Nigeria has with the company was the reason other companies have not been engaged by the country.

According to him, the PPP agreement was better than going to borrow the huge sum of money required for the construction of the new phase of the rail line, adding that: “If we raise our equity, they will raise theirs. But largely, the funds will come from China.”

The minister noted that the rail line is one of the longest in Nigeria now, stressing that besides the narrow gauge, is the Itakpe-Warri Rail line, which Julius Berger got close to completion before it was later abandoned.

He stated that “some of them were vandalised and then we had to re-award it to CCECC to complete the vandalised areas, complete the project and build a new seaport and operate and manage them for 30 years to enable the company recover their money.”

Amaechi also called for the localisation of railway technology, noting that from the history of China railway construction, China localised the American technology, adding that the first American company that started railway construction in China was GE.

He revealed that it was imperative to instruct both CCECC and CRCC to realise the need for local participation of both Nigerian engineers and contractors.

“We need you to work with us to develop the knowledge of Nigerians; that is why we emphasise on you building universities and provide us with lecturers until we can train our own lecturers.

“Just like we are holding CCECC on issue of manufacturing at Kajola, 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.”

On his part, the Vice President of China Railway Construction Corporation (CRCC), Wang Wenzhong, while appreciating the support of the minister and the ministry on behalf of the 300,000 staff of CRCC, congratulated him on his reappointment .

He stated that CRCC is the biggest construction company of China and the biggest railway company globally

“In 2018, we occupy 55 among the top 500 enterprises around the world. Now we have businesses and projects in 127 countries all over the world and with a turnover $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.”