By John Alamu
ONE should be happy with the announcement by the Honourable Minister of Transport, Rotimi Amaechi, that the Minister of Finance, Kemi Adeosun, has released Nigeria’s total counterpart payment of N72 billion to the Chinese for the construction of the Lagos-Ibadan rail line. This is the total equity requirement from Nigeria for the railway works on the route. The Chinese will complement this sum with a loan of N386bn. Unconfirmed reports say that the loan is at an Annual Percentage Rate (APR) of two percent, and will be repaid over 20 years. The total facility value will be N458b (or 1.5billion USD).
The injection of this money into the Nigerian economy at this dire time should, ordinarily, gladden the hearts of the people as its spin-offs should have tremendous impact on the economy. But, that is not likely to be the case, as the figures do not add up. After the initial euphoria, I decided to look at the figures in depth and the first thing that hit me was that I could not ascertain from any source within the country, what Nigeria is getting for this huge outlay of money in specific terms. I. therefore, appeal to Nigerians to ask the federal government, through the minister, what the country stands to gain in specific terms.
Before we get government’s response, I will like take a more critical look at the contract with a view to exposing the reality of the contract, contrary to the information in the public domain.
With the knowledge of what operates in developed countries and in countries where similar things have been done, Nigeria should be getting a brand new railway system, mark the word ‘system’ and this should include track, signaling, rolling stock, electrification, stations, maintenance yards, etc. and these are my reasons.
Sometime ago, CCECC, the Chinese contractor, got unrelenting bad press in Nigeria concerning the cost of its projects. The company does not usually respond to such pressure but on this, it had no choice.
This is what it had to say: that the construction of 1 kilometre of twin track, on an average, around the world, is about 3.5million USD, but in Nigeria, CCECC charges 3.2million USD ( I have issues with these costs but will return to this aspect later). Using the CCECC figures above, Lagos to Ibadan is about 135km hence the track cost will be around 432million USD. It stands to reason that the expectations of Nigerians should be the total railway system at 432million USD which is just about one third of the total loan value.
What else, apart from the tracks, should we as Nigerians be expecting for our money? On signaling, a good up-to-date signaling system will cost about 2million USD per kilometer to design, install, test and commission. For Lagos to Ibadan project, the cost should be about 270 million USD. I have general issues with just awarding this contract especially in signaling.
The proprietary intelligence of the system will be covered by intellectual property rights which translate in reality to the fact that the owners of the system (the Chinese) will be statutorily protected to having the sole right to the maintenance function associated with this installation.
The Chinese will, inevitably, through the back door, build their long lasting existence into the Nigerian fabric with this arrangement. This aspect requires very seasoned experts in engineering and law to untangle. The shame of the whole thing is that the Ministry of Transportation is walking blind into this well-laid trap without even knowing anything about it.
On Rolling Stock (Trains), I will be mindful to remind all again that I am only putting this write-up together based on limited experience. The body to actually tell us what is involved is the appropriate ministry, but we should not bet on that. I doubt very much if the ministry even has a contract in place, let alone a detailed Bill of Quantity (BOQ) or BEME (Bill of Engineering Measurements and Evaluation). On rolling stock, it will be reasonable that the operators of the service will run a 15-minute service throughout the working day. This translates to four (4) trains per hour in each direction. A total number of eight (8) trains with four (4) trains held in reserve. With each train having about 20 No carriages and cost on average of 1.5million per carriage for diesel-propelled units, the total cost will be around 360 million USD.
Concerning stations, expecting about a maximum of six stations along this route, the cost estimate for this aspect will be difficult to ascertain. Basic stations for passenger and freight use are cheap and simple to construct but in today’s railways, advantage is being taken of non-passenger revenue. The stations today are also a commercial hub for adverts, retails and sometimes hotels. The stated are now usually incorporated into the station design and use for more revenue. Again, we turn to the Ministry of Transportation to provide us with the relevant information on design and specification for the stations along this route. The author will make a bold stab and state that a figure of about 100 million USD should suffice for this.
Talking about training, following standard contractual norms, this aspect should be an intricate part of the contract. CCECC should have the cost of training Nigerians embedded in the contract sum. This will be in the form of a structured skills transfer programme. This will enable Nigerians to take over completely the operations and maintenance of this railway system in a specified duration of about two to three years. Since I am being extra generous, a figure of about 50million USD is reserved for this function.
Operations and Maintenance – I will not dwell too much on this subject as it is opaque for now. Nigerians should ask the minister if this aspect is covered, what is covered and how much is reserved for this area. There are other areas which should be looked into in relation to the contract. They include cost comparison, contractor’s safety records/case, indigenous participation, ridership survey and patterns.
The minister should also ask what the country will get in terms of infrastructure for this facility of 1.5bn USD.I have taken time as a concerned Nigerian to look into this in order to avoid the mistakes that have always trailed such contracts in the past, which always leave Nigeria holding the short end of the stick. It’s time to start getting things right in the country.
Alamu, a U.K. trained engineer, writes from Lagos