FG, China sign $3.9bn contract to link FCT, Itakpe/Warri by Railway

The Federal Government has signed a contract agreement for the construction of railway to link Abuja, the Federal Capital Territory with Itakpe and Warri.


The rail line which is about $3.9bn will pass through Barrow and have a branch line to Lokoja, the Kogi State capital.


Also included in the contract agreement is the completion of the rail line from Warri Central Station and construction of the new Warri Sea port.


The Minister of Transportation, Chibuike Rotimi Amaechi, while signing the Contract on behalf of the Federal Government on Thursday in Abuja, said the contract will be operated on a Public Private Partnership (PPP) platform where the Federal Government and the Chinese company are expected to contribute equity to the cost of the construction.


According to Amaechi, “The signing ceremony we are witnessing today is the first PPP railway agreement for Abuja, Barrow, Itakpe and Lokoja. The agreement is between the Federal Republic of Nigeria and China Railway Construction Company International (CRCCI). In the agreement, it is 15 percent Nigeria and 10 percent CRCCI and then we would borrow the remaining seventy five percent as SPV from the Chinese EXIM bank.”


“Part of the agreement is that the CRCCI will provide us with a performance bond before we give a sovereign guarantee for them to be able to borrow the remaining seventy five percent,” Amaechi said.

The Minister added that any outstanding fund arising from the contract will be borrowed with the Federal Government’s guarantee, which would also be backstopped by performance bond from the company. “And then there is a concession agreement that requires CRCCI to manage both the railway and the seaport and recover the seventy five percent and pay the money.


“So, the entire railway for now in Nigeria is constructed by CRCCI. Honestly, I don’t know why we have not concluded the Ibadan dry port. We need to conclude that and get it out of the way. Nigeria is waiting for CRCCI at Abuja to Itakpe and Warri seaport. Before the approval at the Federal cabinet, CRCCI was pushing us with so much pressure to approve it, now that we have approved it they are not on site,” he told the Chinese delegation.


He, however, commended the working relationship between the Federal Government and CRCCI over the years, and reminded them that there was need to localise technology and participation.


“I think that the good working relationship between the Federal Government and CRCCI Is the reason we have not engaged other companies, and there’s the need to localise the technology and we need local participation of both Nigerian Engineers and contractors. So we need you to work with us to develop the knowledge of Nigerians in terms of the Railway University and provide us with lecturers until such a time that we are able to have our own lecturers,” he said.


Amaechi further stated that the Chinese company is expected to operate with the aim of meeting the repayment term of the borrowing within a construction period of thirty years.


Earlier, leader of the Chinese delegation and Vice Chairman of CRCCI, Wang Wenzhong, said they would provide solutions to the development of Nigeria railway and ensure the best in terms of quality delivery. He acknowledged that there had been significant achievements in transportation infrastructure under the present government.


“CRCCI is China’s biggest construction company and the biggest railway company in the world. We pay lots of attention to the development of Nigeria, we also make use of our best resources in Nigeria. We also make demand for our subsidiaries to work harder for Nigeria and her people. We, as government, we know that you have made a lot for the development of CRCCI, we appeal to you to provide your continuous support for the achievements you have made.


“We have also witnessed a great achievement in transportation under your leadership and we are going to provide all solutions to the development of Nigeria railway. We want all projects in Nigeria to be the best in terms of quality,” Wenzhong stated.