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Lagos-Ibadan rail: Extra $656m will raise project cost to over $2.2bn –Experts

The recent request by the Minister of Transportation, Rotimi Amaechi, for extra $656 million for the completion of the remaining 8 per cent of Lagos-Ibadan Standard Guage railway has resurrected the allegation that the contract cost might have been inflated. PAUL OGBUOKIRI reports


$656m requested to complete the remaining 8 per cent work of the project


Though the Federal Government had at different times stated that the construction of the 156 Kilometers double lane standard guage rail line is about $1.6 billion, indications at the weekend were that Nigeria is actually spending more than that on the construction of the rail line.


Experts said in reaction to the recent request to the National Assembly to approve a fresh $656 million for the completion of the rail project which he will be ready for commissioning on January 20, 2021 as 92 per cent of the project has already been completed.


According to the Minister of Transportation, Rotimi Amaechi, the Lagos-Ibadan Standard Guarge line which is remaining just 8 per cent of work to be completed, the Federal Government of Nigeria will spend extra $656 million between November and January 20 for the project to ready for use.


Reacting to the statement credited to the Minister, the chairman of Save Nigeria Freight Forwarders, Importers and Exporters Coalition (SNIFFIEC), Dr. Osita Patrick Chukwu, said that the government has always told Nigerians the amount borrowed to construct the railway but did not tell anybody how much they are paying as counterpart fund.


“That is where the corruption is hiding and now they are requesting for extra $656 million for the completion of just 8 per cent of the work! The question then is how much have they spent so far to achieve the 92 per cent completion of the project which the claimed that they have achieved? How much counterpart fund have paid to achieve the 92 per cent of work done? “The Nigerian government cannot cease to surprise me.


A project you said cost $1.6 billion has reached 92 per cent completion, it is slated for commissioning in January as test riding is already going on. Suddenly you are saying to need a whopping sum of $656 million for the remaining 8 per cent. If you add that to $1.6 billion that is $2.2 billion minus all the counterpart funds the Minister has being signing off to the Chinese.


Nigerians should ask the Minister how much counterpart fund have we paid for this project. In my estimation that project might be costing Nigeria more than $3 billion if the Minister is truly requesting for a fresh $656 million to finish the remaining 8 per cent of work. I need the Minister to prove me wrong,” Chukwu said.


This whooping sum which the Minister is yet to explain whether it is part of the $1.6 billion Nigerian were told the construction of the Lagos-Ibadan rail project will cost or an addition, will be spend within the two months the Minister said is remaining for the project to be fully completed. President Buhari is slated to inaugurate the completed rail line on January 20, 2021.


A note from consultant from the Ashford &  McGuire Consulting expressed worry over the escalating cost of the railway modernisation in Nigeria, saying the dangerous development is that the counterpart funds are set to surpass the loan borrowed for the projects.


They said that by the time the true amount spent as counterparts fund on the rail project is ascertained it will amount to pennywise, pounds foolish.


They said after all the huge amounts Nigeria will pay to China before they can sign the loan as claimed by the Minister, the Federal Government will also pay for all the local operational cost of the company in the name of counterpart fund.


They stated that the acquisition Chinese loans need to be reevaluated as what it looks like in the surface is not what it really is. It will be recalled that Nigerians were told that this project is being finance by a loan from the China Exim Bank.


However the quantum of counterpart fund the country is paying for the project is not known.


The Minister of Transportation, Rotimi Amaechi, on Friday last week, said the Federal Government would need $656 million to complete work on the Lagos-Ibadan railway project. Amaechi stated this while defending his ministry’s 2021 budget before the National Assembly Joint Committee on Land and Marine Transport.


The minister said the amount was needed to put in place necessary infrastructure for the project to serve its intended purpose. He noted that the Ibadan-Kano railway project also required $645.3 million as advance payment to enable the Federal Government to complete its loan signing agreement with the China Exim Bank. Amaechi did not disclose if the amount is counterpart fund or not.


He said, “Under the railway modern programme, I am happy to report that the construction of the Lagos-Ibadan Standard Gauge line has reached 92 per cent project completion.


“However, for the project to achieve full loan drawdown from our co-financier, China EXIM Bank, and attain practical completion for it to be used for the intended purpose, some aspects of works involving construction of upgraded railway stations, signalling and telecommunication system, power supply scheme and construction of pedestrian and overpass bridges have to be completed.


“This additional and extra works amounting to $656 million which is to be financed 100 per cent by the Federal Government of  Nigeria has been approved by the Federal Executive Council for implementation.


“Similarly, for the implementation of the Ibadan-Kano railway, which is the outstanding segment of the Lagos-Kano railway project, one of the conditions precedent to signing of the loan agreement is the release of advance payment in the sum of $864 million, out of which government has released the sum of $218.7 million as part payment, leaving a balance of $644.3 million.”


He said the ministry planned to complete the fencing of the Abuja-Kaduna railway line for security purposes. Amaechi stated that the Itakpe-Ajaokuta- Warri railway project, which was recently commissioned by the President, Major General Muhammadu Buhari (retd), still had an outstanding amount to be paid on the project.


He added that the ministry would commence the reconstruction and rehabilitation of the Port-Harcourt-Maiduguri (Eastern Narrow Gauge railways) next year.


The minister also said the construction of the central railway from Itakpe to Abuja and a 378km single track standard gauge rail line traversing Kano, Katsina and Jibiya with a 20km extension to Maradi in Niger Republic had been slated for next year.


Allegation of inflation of contract


Recall that in June last year when it was revealed that the Lagos-Ibadan 156 km stan-  dard guage rail will cost Nigeria $2 billion, the same amount Ghana is paying to CRCC to construct a 560 km standard gauge rail for the country, the Federal Government quickly denied it.


The Permanent Secretary, Federal Ministry of Transportation, Mr. Sabiu Zakari, had said that the contract sum of the Lagos- Ibadan railway project is $1.6 billion as against the $2 billion allegedly reported and that the cost index/km is $4.09 million as against the S$13.6 million being brandied.


Zakari insisted that the Lagos-Ibadan railway project was being executed in the spirit of transparency and accountability of which the administration stands for.


This clarification came against the backdrop of a report that Ghanaian-European Railway Consortium (GERC) had agreed to construct a 340-kilometre standard gauge railway line in Ghana for $2.2 billion and that the Ghanaian authorities had turned down China Civil Engineering Construction Company (CCECC) owing to high cost of the project and decided to employ the services of a European firm with a lower contract sum.


The Permanent Secretary stressed that there is no basis for comparison as raised by the allegations, saying that the Ghanaian government had since refuted the publication, describing it as “containing a lot of factual inaccuracies.”


He further explained that the Lagos-Ibadan railway track is actually 386 kilometres since it is a double track rail-line as against the 156 km alleged which is just the distance from Ebute Metta (Lagos) and Ibadan terminal stations only.


According to him, the railway project does not depend solely on the distance between terminal points but rely on various factors, which include but not limited to terrain, core operation accessories, land acquisition and compensation, earthworks, bridges, culverts and stations.


Besides, he said that due diligence was followed in the award of the contract as the project was approved by Federal Executive Council (FEC) after a certificate of no objection by the Bureau of Public Procurement was issued.



The first segment of the project was approved in 2012 while the current administration approved the second segment to link Ebute Metta (Lagos) to Apapa Port complex to ease the perennial traffic gridlock that has defied solutions.

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