Nigeria’s Rail prices Exceed AU’s Estimates by Over 100%

Nigeria’s Rail prices Exceed AU’s Estimates by Over 100%
Nigeria’s Rail prices Exceed AU’s Estimates by Over 100%

An investigation has shown that the typical cost per kilometer (km) of the newly contracted Kano-Maradi line exceeds similar projects under the Programme for Infrastructure Development in Africa (PIDA), as estimated by the African Union (AU) by, at least, one hundred pc .

The federal , recently, announced that it signed a Memorandum of Understanding (MoU) with Mota-Engil Group for the development of the 283.75 Kano-Maradi standard-gauge rail at a contract cost of $1.959 billion.

A handout by the Federal Ministry of Transportation said the road would traverse Jigawa and Katsina to urge to Maradi within the Niger Republic, raising eyebrows from different parts of the country.

A breakdown of the contract sum shows that it’ll cost the federal approximately $6.91 million (or N2.6 billion) per km to deliver the project expected to be ready within the next three years.

Findings have shown that it’s less expensive to deliver similar projects in other parts of Africa. More importantly, the quotation for an identical distance under Africa’s rail connectivity program being discussed at the continental level is a smaller amount than half what Nigeria will spend to execute a bilateral project but which the country has chosen to shoulder alone.

In an AU document titled ‘Towards the African Integrated High-Speed Railway Network (AIHSRN) Development’ exclusively obtained by The Guardian, the Union puts the estimates of the new railway line needs of the continent at 12, 000km, which are expected to be completed at a price outlay of $36 billion.

“Under PIDA, 11 ARTIN corridors are determined to need modernization of existing railway lines and construction of latest , modern rail lines as soon as possible as traffic demand is predicted to exceed 10 million tons annually by 2040. during this regard, it’s estimated that about 12,000 km of latest railway lines would be built under the PIDA program at a price of about US$ 36 billion,” the strategy document revealed.

At the estimated cost, the quote per km of rail track is $3 million, which is 57 percent but what the Nigerian Government, which has been a part of the AU rail program conceptualization, can pay the Portuguese-owned Mota-Engil Group for the Nigeria-Niger rail contract.

The PIDA framework is a component of the event of the African Regional Transport Infrastructure Network (ARTIN), which consists of the nine Trans-African Highways and 40 key corridors. There are multilateral treaties and endorsements resulting in the drafting of the implementation roadmap.

The First Conference of African Ministers liable for the Railway Transport System was held in 2006 in Brazzaville, Republic of Congo, resulting in the adoption of the Brazzaville Declaration and Plan of Action on African Railways.

This was followed up with the Railway Professional Conference on Interconnection, Interoperability, and Complementarity of African Railway Networks held in Johannesburg in 2007 where the strategies for harmonizing standards for infrastructure, equipment, and operational procedures for African railways were considered and adopted.

The regional infrastructure integration itself may be a fallout of elaborate discussions on regional integration to facilitate trade and lalaborobility, a part of which was harmonized a series of documents like the Abuja Treaty, a roadmap on growing, self-sustained, competitive, and regionally-integrated continent.

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PIDA specifies critical rail infrastructure, which is according to the general cost estimation. there’s the Dakar-N’djamena-Djibouti Corridor Trans-African Highway whose rail component is estimated to hide 5,139 km and estimated at $14.050 billion or $2.7 million per kilometer, much less than any new rail project being executed in Nigeria.

The Djibouti–Libreville Corridor rail, stretching across a distance of two ,366 km will cost $2.2 million, which is simply 31 percent of what a cash flow-challenged Nigeria will incur on each stretch of km of the Kano-Maradi line.

The 2,891 km Cotonou-Niamey-Ouagadougou-Abidjan Railway may be a hybrid project with 1,234km marked for construction and therefore the remaining 1,657km for rehabilitation). The combined project cost estimate is $5.002 billion, making the value per km $1.7 million.

In a conversation at the weekend, with the Director of Press at the Transportation Ministry, Eric Ojikwe directed our correspondent to interact the Nigeria Railway Corporation (NRC) on the technical issues that would have made Nigeria’s rail projects costlier than those of other African countries.

But the Corporation’s spokesperson, Mr. Mahmood Yakubu, insisted NRC knows little or nothing about details of the contracts. “They cannot refer you to me knowing well that my office doesn’t participate within the signing; nobody is aware about what they’re doing at the ministry,” he noted.

But a transport consultant and railways specialist, Roland Ataugba, told The Guardian that there’s no technical justification on why Nigeria’s rail projects could are delivered at a better cost than any similar projects in any parts of the planet besides uncompetitive bidding and political factors.

Rolland, who is vast in Nigeria’s rail project history, said: “The contracts weren’t competitively procured. They were mostly outcomes of political agreements between the presidents of Nigeria and China. The absence of competition in tendering doesn’t incentivize keenness in pricing.”

Ataugba also noted that the projects are contracted before preliminary designs are administered , implying that the contractor “prices on an enormous guess and would think about all types of risks.

“Indeed, we are now notorious for appointing the contractor before consultants. So, we lose out on the advantage of competent advice before committing to a contract.

“We also nearly always choose the engineering, procurement, and construction (EPC) sort of contract and lately EPC and financing (EPC+F) which have attended be costlier than traditional sorts of engineering contracts,” he argued.

IT is not only the value of the recent project that’s seemingly overvalued. While there’s no official data on the space between Abuja and Warri, which is to be linked with a rail a 30-year project, the prevailing Itakpe-Warri (that is being extended to Abuja) is 320 kilometer. If I fancy Abuja is 262 Km by Google Map estimation, the new entire line, when completed, might be roughly estimated at 582km

China Railway Construction Corporation International (CRCCI), which is involved in rail projects across the planet , has signed an MoU with the federal to deliver the project at $3.9 billion. there’s nothing within the statement by the Ministry of Transportation to point out whether the whole stretch would be re-constructed or if it’s the newly-completely Itakpe-Warri that might only be upgraded. Whichever the detail of the contract is, it’ll cost $6.7 million per km of the project which will be 85 percent financed by CRCCI and its sister company, Exim Bank of China.

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“In the agreement, it’s 15 percent of Nigeria and 10 pepercentRCCI. Then, we’ll borrow the remaining 75 percent from the Chinese Exim Bank through a special purpose vehicle (SPV). a part of the agreement is that CRCCI will provide us with a surety bond before we provides a sovereign guarantee for them to be ready to borrow the remaining 75 percent,” the Minister of Transport, Rotimi Amaechi, said.

IN terms of per km cost, Lagos-Ibadan is that the costliest project delivered under the continued rail reform program. consistent with official statements, the project, which covers a 156km stretch connecting the 2 biggest cities within the Southwest, cost $1.53 billion to execute, making it costlier than the Kano-Maradi in terms of cost per km. The rail project was completed at $9.8 million per km.

In AU AIHSRN, the estimated cost of rehabilitating existing 17, 200km rail tracks that crisscross the continent is pegged at $7 billion or $406,987 per km. The regional pricing benchmark is merely 4.2 percent of what Nigeria sunk within the debt-funded Lagos-Ibadan rail, which many experts agreed was equally rehabilitated.

Other ongoing or completed projects funded by national governments across Africa are equally costlier than the AU estimates but the bulk of them are far but Nigeria’s generously executed program.

For one, Ethiopia’s flagship rail project within the wake of the renewed interest within the infrastructure within the continent, Ethiopia-Djibouti Railway Line Modernisation cost $3.52 billion. The project, which was completed in 2016, isn’t half the value of Lagos-Ibadan in terms of per mile estimation.

But cost efficiency isn’t the sole lesson Nigeria could learn from Ethiopia. Unlike Nigeria’s ‘big brother’ posture within the Kano-Maradi project, the Ethiopia-Djibouti project was financed by the 2 benefiting countries. The Ethiopian government took responsibility for $3.4 billion of the entire investment while the Djibouti Government contributed $878 million.

The funding model of Ethiopia and Djibouti reflects the recommendations within the Trans-African rail program, which envisages that every country takes its infrastructure to its border while its neighbor continues from there, making the connectivity less burdensome for member countries of the regional bloc.

Modernization of Ethiopia-Djibouti Railway Line Modernisation involved replacing the meter-gauge section with a 1,435mm gauge line, and electrification at 25kV designed to accommodate trains traveling at 120km/hour. The printing operation was constructed in compliance with Chinese electrified railway standards, say Ethiopian local media.

All included within the cost outlay were 21 stations and equipped with ticketing and refreshment facilities. a complete of 61 bridges, 37 frame bridges, and 453 culverts were a part of the project that was majorly handled by CRCCI and China engineering Construction Corporation (CCECC). The Chinese are to manage operations on the road for five years while providing specialist training for local employees.

The timely delivery of the project covering a distance of 756km also caught attention. it had been initiated in 2011 while trial service on the Ethiopian section commenced in October 2016, followed by that of Djibouti in January 2017.

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PERHAPS, Ghana’s rail roadmap may be a lesson for Nigeria’s program, which many of us have described as vague. The Ghanaian government features a comprehensive rail roadmap programmed in six phases. The blueprint contains specific projects, distance, and price estimates for yet-to-commence infrastructure.

Apart from phase one, which consists of western and eastern lines put at $4.2 million per km, the typical cost (per km) of the Ghana rail project is $5.6 million, which is $1.3 million but the value of Nigeria’s Kano-Maradi line thanks to commence soon.

In its Rail Infrastructure in Africa Financing Policy Options, a document assessed by The Guardian on Wednesday, African Development Bank (AfDB) has cautioned that railway financing should prioritize projects that specialise in identified markets that generate high volumes.

The recently signed Nigeria’s project may have disregarded this caution. With a landmass of 72 square meters, Maradi’s population, as estimated by the planet Bank in 2012, is 267,249, a touch above the population of Shagamu, Ogun State, as of 2006 when Nigeria conducted the last census.

This leaves many experts, including Dr. Chiwuike Uba, a consultant to the planet Bank, wondering the commercial value of extending the road to the tiny town and the way the project advances the economic agenda of the country.

Nigeria’s railway program may haven’t also been aligned with AfDB’s sustainability policy options as encapsulated within the document referenced. The regional development finance institution recommends that African countries introduce a scientific approach to railway project identification and preparation; include railway financing as a part of a broad sustainable transport policy; establish clear and stable commercial agreements for passenger services, found out railways infrastructure and maintenance funds, and consider larger financial packages and future involvement.

It also urges them to develop monetization methodologies for social, economic, and environmental benefits derived from railways, adapts finance solutions to different railway business models; explore alternative PPP approaches including separation of infrastructure and operations; promote capacity building and training centers to extend railways know-how in the least levels of decision and operations, while improving regulation and monitoring bodies. they’re also required to coordinate the acquisition of wheeled vehicle and maintenance and alignment of operating procedures among African countries also as found out a task force for African railways.

Commenting on Nigeria’s rail project burden, Uba said: “The cost of rail construction is highest in Nigeria compared to other African countries. For example, it costs about $6.5 million, $5.6 million, and $9.6 million per kilometer to build a standard gauge rail track in Ghana, Kenya and Nigeria, respectively. Note also that Maradi is not Niger’s main city. The government of Niger already has a bilateral treaty with the Republic of Benin for the construction of a railroad from Cotonou to Niamey (the main city in Niger).”

Commenting on the MoU of the Kano-Maradi rail project, Minister of Transportation, Amaechi said: “The contractor, Mota-Engil Group, a Multinational Engineering and Construction firm has also agreed to build a University as part of their CSR while working on the project.”

Uba, like other public analysts, said it was curious that a contractor would build a university as CSR.

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