There is celebration in government following the ground breaking interim concession agreement reached with the consortium of firms led by the US based General Electric for the revamp of the nation’s Western and Eastern narrow gauge rail system.
And it will be costing Nigeria not one kobo as the initial investment of between $45-100 million will be covered by the consortium which has received a sovereign guarantee that any certified investment made will be refunded if the concession does not get to financial close as envisaged.
Many have described the agreement as a good one for Nigeria for several reasons.
“Typically, concessions are done in respect of a going concern but this agreement with GE is taking a rail system that is virtually dead and bringing it back to life,” a senior presidency official told BusinessDay last night.
“For most of the last 15 years, the Nigeria Railway Corporation, NRC has not had one single commercial freight contract so you can be right in saying the system was dead,” the official said while explaining the euphoria in government since the deal was initialed in Washington last weekend.
A significant amount of cattle and other agricultural goods come from the north down south while manufactured goods including cement and salt as well as imported goods and petrol move from the south to the north and none of that goes by rail.
BusinessDay learnt that Dangote group once tried to move its salt from Lagos using the NRC but its train derailed in Umuahia (South East Nigeria) and the consignment was left abandoned by NRC officials for 30 days. The oil firm Oando also had a bitter experience when it engaged NRC to move petrol products by train to the north.
According to BusinessDay investigations, in all these 15 years NRC management never accounted fully for revenues from the passenger rail services they operated. And a $1.7bn track rehabilitation budget broken into nine separate contracts has yet to be fully accounted for.
Since signing the agreement, members of the GE consortium have since left Washington for Johannesburg South Africa for a series of meetings and workshops aimed operationalizing the deal within the shortest possible time.
At the onset, the focus of the consortium’s operations will be on bringing about a rapid transformation of how container cargoes leave and come into the nation’s premier ports in Apapa.
One of the consortium members TRANSNET of South Africa is coming with a trains operations module while another member APMT, the ports terminal operator is making a separate investment to turn one of the disused train stations in either Ilugun or Omi Adio into an inland port terminal for the optimization of the Apapa port decongestion project.
Under the scheme, containers from Apapa will be taken by rail to the inland container terminal while export goods will now be transported from the inland terminal to Apapa. This way, container-bearing trailers will no longer need to come into Lagos, BusinessDay learnt.
In addition, the interim arrangement will focus on the movement of fertilizer inputs from the ports to the 11 functional fertilizer blending plants and from there to the markets around the country.
Recently a ship bringing fertilizer input under the federal government scheme run by the Nigerian Sovereign Investment Authority, waited for 42 days to berth in Apapa because of the traffic gridlock there where it takes an average of eight days for one truck to enter the port.
The government expects that the volume of cargo moved by the consortium managed rail system will rise to about 40,000 metric tons per month from the current 0-3,000 metric tons achieved by the railway corporation.
However, this will only happen after some light repairs of the rail tracks and the consortium is able to lease 10 new locomotives from South Africa’s TRANSNET while repairing another 10 dilapidated locomotives currently idle at yards of the NRC. The consortium is also be bringing 200 new freight wagons while aiming to repair some the NRC’s degenerated freight wagons scattered across Nigeria.
The NRC it was learnt has suffered about 1,000 train derailments since 2015, an incontrovertible proof of the near death of the corporation. A good train system suffers no more than five derailments a year.
“There has been no train culture at the NRC for decades,” said a former chief of the corporation.
Trains operated by the NRC today run at a maximum speed of 15-20 kilometres an hour along windy and dilapidated tracks on the Western and Eastern lines but this speed will rise to at least 40 kilometres an hour once the basic repairs have been carried out.
Some sections of the rail tracks are 100 years old and there has been no track maintenance in Nigeria for decades according to investigations.
When NRC was at its best, a train service was operated simultaneously from Lagos and Kano daily but today only one single service is operated in a whole week if at all. The consortium plans to rapidly restore train services within key cities along the two lines without delay and then move on to having one service depart both Kano and Lagos every morning. (BusinessDay)
