Nigeria's $26 billion railway projects collapse
Attacked Abuja-Kaduna train

By AYOOLA OLAOLUWA

The euphoria that greeted the resuscitation of rail transportation in the country has continued to fade with the non utilization of already completed tracks and terminals, as well as the stalling of construction works on ongoing projects, Business Hallmark can report.

The ambitious rail projects scattered across the country, BH checks revealed, are presently plagued by several hiccups, especially the degeneration of already installed facilities owing to abandonment as a result of constant militant attacks; vandalization of rail tracks by iron thieves and paucity of funds.

It would be recalled that the President Muhammadu Buhari-led administration had embarked on the construction of six major railway projects across the country expected to gulp $26 billion at completion.

The projects include the Lagos-Kano standard rail line project covering 1,402 kilometres awarded at the cost of $2.3 billion to the China Civil Engineering Construction Corporation (CCECC); the Abuja-Itakpe-Warri rail line project with a contract value of $3.90 billion being constructed by China Railway Construction Corporation (CRCC), CCECC, Julius Berger, Sinohydro Corporation and General Electric; and the 1,443 kilometres Port-Harcourt to Maiduguri rail line project at a contract value of $3.2 billion.

Others are the Kano-Maradi and Kano- Kaduna standard-gauge railway projects; the Lagos-Calabar Coastal Railway Project II at a contract value of $11.10 billion covering 650 kilometres, as well as the 334 kilometre Ogun Intercity Railway Line with contract estimated at $3.51 billion to be constructed by CCECC.

Already, the first phases of the Lagos – Calabar rail line (Ibadan -Abeokuta – Lagos); Kaduna-Kano-Maradi standard guage track (Abuja-Kaduna) and the Abuja-Itakpe-Warri rail line (Itakpe – Ajaokuta-Warri) have been completed.

While the Port-Harcourt to Maiduguri; Kaduna-Kano-Maradi; Ogun Intercity and the Lagos-Calabar coastal rail lines are currently under construction or awaiting funding.

According to a document detailing the rail projects compiled by the Ministry of Transportation obtained by BH, modern terminals are being built in major cities the trains will pass through.

Many of the terminals, particularly those in Lagos, Ogun, Abuja and Kaduna are already completed or nearing completion.
However, in spite of the huge resources already expended on the revitalization of the projects, activities on the rail tracks and terminals are almost non-existent.

During a visit to the Agbado-Oja Terminal in Ogun State on Friday, our correspondent observed that the terminal was devoid of activities.

From 8 to 10.25am that our correspondent was at the terminal, no train showed up. Some Chinese and local staff of the CCECC seen working at the site informed our correspondent that activities on the Lagos-Ibadan route have since stopped.

It was, however, gathered that normal activities had been suspended or scaled-down down for quite a while.

“I can tell you without fear that not a single train has passed through this yard in the last two weeks”, a local CCECC worker informed BH.
It was also observed that some of the facilities already installed at the terminal, like the escalator, are no longer functioning, while waste left behind by traders at the popular Agbado-Oja littered the premises and rail tracks.

However, an informed source at the Nigerian Railway Corporation (NRC) blamed the lack of activities on several factors, notably the reluctance of jittery passengers, who no longer patronise the trains out of fear of being attacked by militants, as well as the intentional reduction of services by the NRC management.

It was reliably gathered that the recent attacks on two Kaduna to Abuja trains scared off most passengers who had before now preferred to commute by rail.

Confirming this in a recent media interview, the Managing Director of NRC, Fidet Okhiria, disclosed that the March 28 Abuja-Kaduna attack on the Abuja-Kaduna route made several travellers to abandon railways across the country.

“The Abuja-Kaduna train bombing on March 28 has seriously affected us. The Abuja-Kaduna service was doing marvelously well before the attack. At a time, we were hitting N450m monthly and by the time you remove all operational costs you’ll still have something to pay to the government.

“But now, we can hardly buy diesel to operate. In fact, the major headache now is the price of diesel. For instance, on average, we use about 24,000 litres daily for the Lagos-Ibadan service and we barely earn up to N1.7m per day.

“Now the supply cost for a litre of diesel is close to N1,000. At the filling stations, you get it for about N700 to N800, but if you have a supplier, he will have to put his profit margin, VAT and others, and this brings the cost to about N1,000 per litre.

“So, we are talking about spending almost N4m on diesel alone, when we barely make N1.7m. But we still have to provide the services on that route,” he noted.

He also confirmed that the corporation was forced to cancel the Abuja – Kaduna trips, as well as reducing the trips on its Warri-Itakpe and Lagos-Ibadan train services by half due to the the negative impact on railway services caused by the terrorists attack.

“In the 2022 budget, the government provided about N500m for diesel, which barely lasts up to a month for rail services across the country.

“We also search for funds from other sources, such as property rents and others. So, we use it to augment what we earn from the train services. See, it has been a serious headache, I won’t lie to you. It has been stressful and the NRC is owing for diesel, but we cannot stop.
“So, we had to reduce the number of trips by half on both Lagos-Ibadan and Itakpe-Warri train services and that is what we are still doing. This is because the revenue we earn cannot pay for the amount we spend on diesel presently.

“We are just trying to get support from other sources to be able to pay just for diesel, not to talk of payments for cleaning, security, among others. All those are also pending issues that will take a lot of money to maintain them.

“The Lagos-Ibadan trips were up to six in the past and by now we should be talking about 10 trips, if not for the problems. But now, we operate four trips on that service. On the.Warri-Itakpe service, we are doing just two trips as against the four trips that we were doing before,” he added.

Another challenge stalling the delivery of the rail projects is the paucity of funds caused by the pullout of the Chinese government from capital financing of the projects.

According to impeccable sources in the Ministry of Transportation, the Chinese decided to cut funding after the outcry that trailed its huge loans to the country, as well as the negative impacts of Corona virus to the Chinese economy which forced the country to limit trade relations with countries.

“The Chinese did not even mind the outcry until the National Assembly exacerbated the matter by setting up committees to investigate the loans.

“We (FG) were told by the Chinese that we had to sort out the issue before they can resume the financing of the rail projects”, the source disclosed.

Former Minister of Transport, Rotimi Amaechi, had in February expressed frustration with the Chinese refusal to release more funds for ongoing railway projects and the risk of outstanding projects failing should the funds not be made available in due time.

“We are stuck with lots of our projects because we cannot get money. The Chinese are no longer funding. So, we are now pursuing money in Europe. We have gone to Standard Chartered Bank. They have not done financial closure but they have approved some level of funding for Kano-Maradi.

“We are putting pressure on all the necessary institutions that used to give us funds. And hopefully, before May (2022) we will be able to get enough funds to complete this project”, Amaechi had assured.

However, it was gathered that construction works on almost all the rail projects have stopped after negotiations on new financing stalled.

Apart from the paucity of funds, the incessant robbery attacks and vandalization of already installed rail tracks, equipments and electricity cables by vandals due to the unmanned massive areas the projects passed through, is threatening its viability.

There have been reported cases of close shaves with train drivers forced to make emergency stops after discovering the carting away of several miles of rail tracks by iron and metal thieves.

A global rating agency, Fitch, doubted the successful takeoff or sustainability of some of the rail projects, particularly the Lagos-Calabar Coastal and the Kaduna -Kano-Maradi standard guage lines.

“We remain sceptical about the near- or medium-term construction of the Lagos-Calabar coastal railway, as financing for the project remains unclear and it would traverse particularly high-risk areas, including the Niger Delta.

“While Standard Chartered’s involvement would pose a significant upside risk for the project, the bank has not confirmed any involvement in the project and we do not currently factor any financing from the bank into our outlook for the project.

“It further remains unclear to what extent the lack of Chinese financing would impact the construction contracts that had previously been awarded to CCECC, which further mutes our view the project is unlikely to move into the construction phase within the near or medium term”, Fitch said in a report.

Also speaking, the Chief Executive Officer, African Railway Round Table, Mr. Olawale Rasheed, said that though the government has good intentions for the railway sub-sector, the approach to building the railway was not in line with best practice and unsustainable.

“Railway operation is a business and not a development project. The Nigerian government must treat it as such if it must make any meaningful progress in the railway modernisation project.

“The best approach is private sector involvement in the design, construction and operation of the railway,” he said.

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