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China signs contract for coastal rail project in Nigeria

Out-Law News | 24 Nov 2014 | 10:21 am | 1 min. read

China and Nigeria have formally signed a construction contract to build a railway along Nigeria’s coast, the China Railway Construction Corporation (CRCC) has announced.

China’s state-run Xinhua news agency quoted the CRCC as saying that the $11.97 billion contract is “China's single largest overseas contract project”.

The 22-stop railway, which covers a distance of 1,402 kilometres, will link Nigeria's most populated city Lagos in the west with Calabar in the east, according to the CRCC. Trains will travel at a top speed of 120 km per hour.

CRCC chairman Meng Fengchao told Xinhua: “It is a mutually beneficial project.” He said the project would “adopt Chinese technological standards and lead to Chinese equipment exports worth $4bn such as construction machinery, trains and steel products”.

Meng said: “The project will create up to 200,000 local jobs, directly or indirectly. Up to 30,000 fixed job posts may also be provided when the railway is operational.”

In addition, CRCC president Zhang Zongyan said the company plans to launch further studies in the region “to allow railways, a green and efficient transportation mode, to play a more significant role in Africa”.

Nigeria is China's third largest investment destination in Africa and China's accumulated investment in Nigeria reached $1.95 billion by the end of 2012, according to Xinhua.

Separately, the China Export Import (Exim) Bank is providing a $500m concessionary loan for the 186km modernisation of Nigeria’s Abuja-Kaduna rail line, which includes building 36 bridges and nine “fully-developed stations”, all due for completion in 2014. The remaining $374m for the project comes from the federal government of Nigeria. Track laying for the single standard gauge line was formally launched in July 2013.

Nigeria’s government said last June that it remained committed to offering more ‘on-completion concession agreements’ to increase the level of foreign direct investment in overhauling the country’s rail infrastructure.

Nigerian vice-president Mohammed Namadi Sambo said the government was renewing efforts to modernise the rail network. He was speaking at a ceremony to mark the commissioning of several new air-conditioned diesel-powered railcars and six 68-seater air-conditioned long distance coaches. The new rolling stock was procured by the Nigerian Railway Corporation.

The Nigerian government’s ‘25-year railway strategic plan’ up to 2027 aims to encourage private sector investment for the renovation of the country’s existing narrow gauge railway lines and building new, standard-gauge lines.

Nigeria’s president Goodluck Jonathan told the World Economic Forum’s infrastructure summit last year that his government had increased the ratio of capital expenditure for road and rail infrastructure relative to current expenditure from the national budget by 8% in the previous three years. He said a “significant portion” of savings from reductions in subsidies on petroleum products had also been committed “to expand and improve road and rail infrastructure”.