Africa: 19 years after initiation uncertainty trails the funding Of $11.1bn Nigerian Coastal Railway from Lagos to Calabar

railway NRC

The N11.17 billion Lagos-Calabar coastal railway project that was recently approved by the Federal Executive Council (FEC), though an ambitious project in the railway modernisation drive of the present administration, may be hampered by uncertainty over funding, Daily Trust reports.

The Lagos-Calabar coastal project has been in the pipeline for almost two decades, predating the current administration.

Daily Trust learnt that the project is part of the 25-year railway strategic plan designed in 2002 under the former President Olusegun Obasanjo’s administration. Other projects under the category are the Lagos-Kano rail which is being constructed in phases. The phase one and phase two are the Abuja-Kaduna and the Lagos-Ibadan, which was commissioned on June 10, 2021 by President Muhammadu Buhari.

READ: Africa: Nigeria Railway Corporation (NRC) accuses FEC of terminating 80% completed N72.34bn eastern rail contract, from Port Harcourt – Maiduguri
Similarly, the Ibadan-Kano leg of the project was to take off immediately, but the ground-breaking was delayed due to paucity of funds while another segment of it, which is Kaduna-Kano, was flagged off.

19 years later, the Lagos-Calabar coastal rail, a 1,400 kilometre-railway, has suffered delayed take-off owing largely to funding challenges.

It would be recalled that in 2016, China and Nigeria signed an agreement for the over $11 billion contract to build the coastal railway, which was to start before the end of 2018.

While the project did not take off, the Federal Government at the same time flagged off the Lagos-Ibadan project which is 157km and completed it in record time.

Along the line, the government also did the ground-breaking for the Kano-Katsina-Jibiya-Maradi-Kano-Dutse line, which is being funded by a consortium of European financial institutions. This was followed by the ground-breaking for the reconstruction of the Eastern rail corridor, the Port Harcourt-Maiduguri rail.
However, the Federal Executive Council last week revived the project with the approval amidst uncertainty over the source of funding for the project.

The Minister of Information and Culture, Alhaji Lai Mohammed, who briefed newsmen on behalf of his counterpart in the transportation ministry, Rotimi Amaechi, disclosed that the council accepted two memos to expand and consolidate on the continuing rail projects.

Mohammed said, “The first one actually has to do with the Kano-Jibia rail and then the other one has to do with the Port Harcourt-Maiduguri route. Actually, what was approved there today was funding to ensure that work starts immediately on those two routes.

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“Another memo that was approved today was the ratification of the President’s approval for the award of the contract for the Lagos-Calabar coastal standard gauge rail.

“You’ll remember that this is a very old project, which we inherited. Under the former administration, an approval was given, but nothing was done. Today, the council has given approval to commence the Lagos-Calabar coastal route.”
He noted that the route was critical because after the Lagos-Kano route, the Lagos-Calabar coastal route would link all coastal cities in Nigeria.

He said the proposed route alignment would run from Lagos to Shagamu, Shagamu to Ijebu-Ode, Ijebu-Ode to Ore, Ore to Benin City, Benin to Sapele, Sapele to Warri, Warri to Yenagoa, Yenagoa to Port Harcourt, Port Harcourt to Aba, Aba to Uyo, Uyo to Calabar, Calabar to Akamkpa to Ikom, to Obudu Ranch; with a branch line from Benin City to Asaba, Onitsha Bridge and then Port Harcourt to Onne Deep Seaport.

He also disclosed that the project would cost $11.17bn.
The approval was coming two months after the President directed the Ministry of Finance and the Transportation Ministry to conclude financial transactions for the coastal rail.

Buhari at the commissioning of the Lagos-Ibadan railway in Lagos directed the Ministries of Transport and Finance to “vigorously act on engagement and reaching financial agreements with appropriate co-financiers to partner with the Federal Government for the development of the Ibadan – Kano railway and the connection to the Tin Can Island port as well as the West – East Coastal rail line from Lagos to Calabar linking Onitsha, Benin, Warri, Yenagoa, Port Harcourt, Aba and Uyo.”

But Daily Trust reports that as far back as 2019, the government approved the request from the Ministry of Transportation to source $2.3 billion loans to execute the Lagos-Calabar coastal railway project.

The Minister said at the time that a sum of $1.8bn would come as a loan from Chinese banks, with the government providing a counterpart fund of $500 million.

He had said, “The government has approved for us to seek a loan. So we are taking the segment that starts from Port Harcourt to Warri to join the central line that goes to Abuja. They are all part of the coastal rail line which is about $11.1 billion,” the minister said.

Other segments include Benin to Onitsha, which will join the central line at Agbor as well as the Port Harcourt-Warri line, joining the central line at Warri.

With the new approval from the President, it was not clear if the mandate would be the full commencement of work or the phased construction as earlier approved in 2019 even as the source of funding for the project is not yet stated.

Daily Trust reports that the Federal Government borrowed $2.5bn for the construction of the Lagos-Ibadan project from the China Exim Bank.

Also, similar funding is being expected for the Ibadan-Kano which costs $5.3bn. Similarly, another $1.9bn would be sourced from financiers in Europe to fund the Kano-Maradi line linking Nigeria to the neighbouring Niger Republic.

With additional $11.17bn expected borrowing for the recently approved coastal rail, Nigeria’s debt to China might soon be hitting an all-time high if the financial agreements work.
An economist, Prof. Ndubisi Nwokoma, said the government can borrow if the project to be funded with the debt would pay itself all through and if it is cost-efficient. “If the returns, the revenues can sustain it, otherwise it is not worth it,” he said.

Be that as it may, experts say the project when completed would be the most transformational railway project in Nigeria.
The first Indigenous Managing Director of the NRC, Elder NAT Okoro, in a chat with our correspondent recalled that the Lagos-Calabar rail is a project under the 25-year strategic railway development (2002-2027), which he was commissioned to develop by the former President Olusegun Obasanjo.

Elder Okoro stated that no project can be more strategic than the coastal railway as it would link all the seaports in Nigeria to the rail and transform the economy of the nation.

“The coastal railway is very important so that if they offload the goods in Apapa, you load them into the train since the ships cannot move further to that side, the train will take it to Calabar at a comparatively cheaper cost. Markets will flourish, people will get employment,” he said.

A travel expert, Mr. Ikechi Uko, said the project is a welcome development as it would link major Nigerian cities and ease transportation.

He said, “If this Railway project comes to reality then it will be the most Transformational Rail line in West Africa. It is going against the normal coast to Hinterland lines that the Colonial Masters built across Africa. It will transform transportation in Nigeria. It links the Cosmopolitan Nigerian Cities and brings the kind of safe Transport that links all other forms of Transportation together. It is a desirable Project.”

According to him, there was nothing in taking loans if the project’s impact would be visible.

Amaechi who spoke with newsmen recently however vowed that all the itemised railway projects would be delivered, saying the government is currently working on the funding for the Lagos-Calabar.

“I have to deliver Lagos-Calabar because nobody has mentioned it, but we are into it. We are working on the funding. Once we get the funding, we would do ground-breaking. I have to deliver that.”

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