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It was meant to be an interim deal but it took Nigeria one whole year to negotiate and sign an agreement with a consortium led by the global infrastructure giant General Electric (GE) for the modernization of the country’s narrow gauge rail network.
The agreement is only for the initial phase of the concession of Nigeria’s Western and Eastern rail network.
It has been in the making for nearly twelve months and it finally happened only because the visit of President Muhammadu Buhari to Washington provided an opportunity to bring the protracted negotiations to a close so a major dividend can be presented for the presidential summit.
The idea of revamping Nigeria’s decrepit rail system was first mooted ten years ago but the agreement signed in Washington DC at the weekend may eventually signal the commencement of the upgrading and optimization of the 3,500 kilometres of dilapidated narrow gauge rail track that has been managed by some of Nigeria’s inept and poorly trained Railway Corporation technocrats and distracted and compromised masters.
If it goes well, the interim agreement will, according to FGN’s plans, promote faster movement of passengers and goods across the country and lead to a better quality of life for its citizens.
The government of Goodluck Jonathan first initiated the idea of revamping the rail system in 2009 when it requested GE for help with the supply and maintenance of 100 locomotives to the moribund Nigeria Railway Corporation.
However, because the corporation did not have the funds or the capacity to take on that large order, that order was reduced to 25 locomotives, supplied in 2010.
Virtually all those locomotives are dead today because Nigeria failed to sign a maintenance agreement for the 25 locomotives.
The federal government also due to lack of capacity and demand had to walk away from a joint venture with GE to build locomotives in Nigeria.
Government officials told BusinessDay that when the former Chairman/CEO of GE Jeff Immelt visited Buhari in February 2016, the president asked what GE could do to help bring life back to Nigeria’s rail system.
The federal government subsequently decided to concession the rail system via a bid process which GE and its partners later won.
A letter of award was given to GE by the government in May 2017.
As part of the procurement process managed by the Ministry of Transportation and the Infrastructure Concession and Regulatory Commission, ICRC, the government recognizing that the negotiation process will take a lot of time and seeking results during its first term, opened the way for the prospective concessionaire to undertake an interim phase.
This interim operation is meant to immediately increase train frequencies on both the Western and Eastern lines.
For more than 100 years, the building and upgrading of Nigeria’s rail network has been bedevilled by corruption, abuse of office, intrigues and ineptitude on the part of government officials.
The first attempt at building a rail line in Nigeria began in 1915 with the Western line.
Laying of tracks for the Eastern line began a few years later and which first ran from Port Harcourt to Jos but the late Prime Minister Tafawa Balewa promoted the extension of the line up to Maiduguri when he became Minister of Transport in 1957, ensuring that the line went from Bauchi through his village of Tafawa Balewa and on to Maiduguri.
Incidentally, the rail station in Tafawa Balewa is today about 100 metres from his house and that line was finally completed in 1961.
Nigeria’s Western and Eastern rail lines are connected by way of a spur line between Kaduna along the Western line and Kafanchan on the Eastern line.
During the administration of President Goodluck Jonathan a whopping $1.7bn was said to have been spent on the revamp of the rail tracks. Sadly, this revamp was split into nine different contracts given to mainly indigenous companies.
Today the rail tracks are worse than they were before the contracts because the work where it was done by the contractors was largely sub-standard. Worse still none of the nine contracts has been completed satisfactorily. As one source told BusinessDay, “the $1.7bn simply vanished into thin air.”
Whereas the signing of the agreement at the weekend is a welcome development, that it took one whole year to negotiate a mere interim arrangement, signposts the tough negotiations ahead before the full substantive concession is ready for execution.
Government officials said in Abuja last night that the interim phase will ensure improvement of the movement of passengers and goods across the country raise the quality of life for Nigerians by restoring commercial activities to communities around rail stations, facilitate the decongestion of the Apapa ports via rapid movement of containers into and out of the ports by rail.
It is expected that passenger rail frequencies will double.
In addition, freight haulage capacity by the end of the first 12 months of the interim phase is expected to increase roughly ten-fold, from its current less than 50,000 metric tonnes per annum to about 500,000 metric tonnes per annum once the neglected rail tracks receive some basic improvements.
The consortium estimates that the sum of $45m will be required for some basic maintenance of selected sections of the narrow gauge track, the lease of 10 locomotives to be immediately made available, as well as for the repair of 10 unserviceable NRC locomotives and production of 200 freight wagons along with basic maintenance spares and tools.
Even when the substantive concession is fully negotiated, moving to financial close, employing people, setting up workshops and deploying equipment will also take quite some time.
And there are still some sticky issues still to be hammered out.
“Whatever the issues are, I believe that this interim arrangement give the parties time to iron the issues and the various conditions precedent ahead of commencement,” Banjo Alabi, a Washington based consultant told BusinessDay on Saturday.
BY OUR REPORTER
