By Ikechukwu Obi
The Minister of Transportation, Rotimi Ameachi, has revealed that Nigeria is currently negotiating loans to the tune of $19.7 billion for critical rail projects across the country.
A breakdown of the figure shows that the Lagos to Calabar railway line will take the lion’s share of the loan at a cost of $11.1 billion. Others are the Ibadan to Kano line at a cost of $5.3 billion, Port Harcourt to Maiduguri at $3.3 billion.
“We’re negotiating Ibadan to Kano about $5.3billion, we’re negotiating Lagos to Calabar which is $11.1billion, we’re also negotiating Port Harcourt to Maiduguri which is about $3.30bn”. He said.
Ameachi spoke while granting an exclusive interview to the editorial team of Red Dragon magazine a Nigeria/Chinese interest business magazine and sister publication of Daybreak.ng.
On the source of the loans, the transport minister said that they are from different sources noting that the loan for the construction of the Lagos to Calabar line was the most complex.
“The Chinese were expected, by the agreement I saw, to source the revenue from China Exim Bank. So we have written to China Exim Bank, we wrote to them last December to remind them of that. At the same time we have had a meeting with the same China Exim Bank to see if we can raise that money. we’re also going to have a meeting with Credit Suisse to see if they can provide us with a loan at an interest rate we can afford. And there are other groups we’re talking to, to be able to come to a conclusion on financing for some of the rail projects. We’re also initiating a loan facility for Kano to Maradi. That project has been awarded to a Portuguese company called ‘Mota- Engil’ and we’re looking at a new loan facility from Portugal and Germany. I hope we get that loan because if we do, we expect to start construction within first quarter of 2021, for Port Harcourt – Maiduguri , we’re negotiating with a bank in China” He said.
Ameachi also spoke on the general misconception by some Nigerians on the loan portfolio of the federal government for the construction of the rail project, the debt trap debate, the role of China and the CCECC in the rail modernization programme, and sundry issues, read excerpt of the interview below
Excepts from interview:
Assessment Of The Railway Modernisation Programme
I will be the wrong person you should ask that. There’s a saying in my village that a dancer cannot see his back. Only the visitors see whether he’s dancing well or not so you’re the best person to answer the question, not me.
However, I have already acknowledged that the Obasanjo administration started it, we took it up from where they stop.Yes, he started the concept. When I started speaking here I attributed it to Obasanjo, I didn’t say we started it. One good thing about President Buhari is that he warned us “go and complete what you met on the table”. You see the difference between him and others? Other Presidents would like to start their own but what he did was to look at the master plan, look at how it connects economically, anyone that had no impact, drop it.
So what do you do? You look at the entire country, you know that the Western line Lagos to Kano is essential. In fact if you look at what the white man did, if you go to Funtua, Kaura Namoda, that’s Western line. Then Eastern line, Port Harcourt to Maiduguri naturally, which is what we’re rehabilitating now. In fact we’re reconstructing you would understand the impact these lines would have on the economy of Nigeria.
We have just added Port Harcourt to Owerri, Port Harcourt to Bonny to get to the new seaport in Bonny. Then the South-South line which is Lagos to Calabar. If you do these three plus the Central line which we awarded having completed Itakpe to Warri, the Abuja to Itakpe through Baro and getting to Lokoja now gets the whole country connected. The only people that will be left out, which we’re talking about how to manage, will be Sokoto, Kebbi, Taraba, Adamawa.
Why We Are Reconstructing The Narrow Gauge from Calabar to Maiduguri
The standard gauge is nearly $14bn and the country is carrying over $11.1bn load already and you want to put another $14bn? It will be difficult. So what we’re doing is to improve on the narrow gauge. The cheaper thing is to reconstruct, that is we remove the entire old thing and lay new tracks, new train stations, new communications networks, everything at $3.03bn. Then in future, we expect whoever will be President to take over from what we’ve done. Don’t forget that the modernization program is reconstruction, rehabilitation of narrow gauge and later the construction of the standard gauge. That’s why I say modernization.
Is Nigeria Heading Towards A Debt Trap With China?
You should ask the Minister of Finance, I’m not the Minister of Finance. But if I’m to join that debate as a Nigerian, I will ask a simple question, how much have we borrowed so far for the entire railway modernization programme?
I can tell you that in the Ministry of Transport, we borrowed $1.4bn for Lagos-Ibadan, $500m for Abuja-Kaduna, so that’s $1.9bn, so what’s the noise about? But once they hear me announce a contract they assume we have taken the loan. If they hear we have just announced a contract from Lagos to Calabar for $11.1bn, they shout ‘we have borrowed $11.1bn’. And they say ‘this Amaechi man wants to kill us’. If they hear we have approved a contract of PH-Maiduguri and the cost is $3.02bn, they shout ‘Amaechi again!’. If we announce the contract for Kano to Maradi for $1.9bn, they assume we have borrowed it already.
If you see how much bravery Mr Presdient has had to withstand and I know they will think it’s hero-worshipping and I don’t like hero worshipping but I’m saying if you see how much strict discipline the President has endured, don’t forget that the contract for Lagos to Ibadan came down to $2bn at the end of the day less than initially projected. All we borrowed was $1.4bn meaning we’re paying $600m from budgetary provisions. It’s discipline. At a period when we didn’t have money, we’re disciplined enough to raise $600m and pay.
I will tell you one of my experiences in the cabinet which will feature prominently in my book someday. I went to cabinet under the advice of the ministry. When you complete the construction of Lagos to Ibadan, you need to have the rolling stock for Lagos to Ibadan. So what do we do? We decided to borrow $500m from China to buy the rolling stock, locomotives, coaches and all that for purposes of commercial activities in that line. So I went to cabinet for approval of that loan and the then Minister for Finance Kemi Adeosun said ‘no, no, no! Mr. President, I will not accept that, I will rather ask the Minister of Transport to put it in the budget so that we fund it ourselves directly than borrowing $500m. I looked at her, then it was N159bn and they say put it in the budget. I said ok. As I’m talking to you today we have paid almost 50% of the money without having to borrow that money. So all that is what fiscal discipline and a reduction in corruption has done to public expenditure.
In this exclusive interview with the Honorable Minister of Transportation Rotimi Ameachi, he talks about the railway modernization programme of the federal government, its impact on the economy, the commitment of the government to ensure speedy completion of the project, the impact the project would have on the economic revitalization of Nigeria, especially with the link line of the Lagos Ibadan rail line to Apapa ports.
The honourable also expresses to the Chinese government for access to loans from financial institutions in china and the CCECC for providing the expertise and technology that has seen Nigeria, commission the first standard railway line in the country and increasing the stock of railway line in the country and other ancillary facilities.
The Railway Modernization Program
The railway modernization is the attempt by the Federal Republic of Nigeria to rebuild the railway infrastructure which was started by the British colonial masters. Like you know before the Obasanjo regime railways had collapsed. The narrow gauge was completely destroyed so President Obasanjo came up with the policy of rehabilitating the narrow gauge and building new standard gauge all over the country. For him he thought he could rehabilitate the 3,500km of railway, maybe some to carry cargo before building the standard gauge.
So when we came, President Goodluck Jonathan had already commenced the construction of the standard gauge from Kaduna to Abuja. He had done nearly 80%, all we did was to complete the construction from our own budget expenditure and then introduce commercial activities on the track having completed it. We brought coaches, locomotives, wagons and commenced commercial activities from Abuja to Kaduna.
Thereafter we commenced construction of Lagos to Ibadan after obtaining a facility from the China Exim Bank for $1.6bn of which we’re to contribute 50% of the $1.6bn. The administration also reviewed the situation from Itakpe to Warri which has been there abandoned for over 32yrs. By the time we completed it, it was nearly 34yrs in waiting. So we reviewed it and then from the budget (not from a loan), we commenced the reconstruction and rehabilitation of the abandoned parts. You know some criminals had vandalized some portions of the Itakpe to Ajaokuta and we had to rebuild that completely and then did total rehabilitation of the entire 380-something kilometers of rail that led up to Warri. However, it didn’t get to the seaport and we’re looking at how to get it to the seaport.
The other one is Lagos – Ibadan. As you know it is 98% completed so we have commenced commercial activities for Lagos – Ibadan and extended the line to the Apapa ports while negotiating the loan for Ibadan to Kano, there are about four loan portfolios we’re negotiating now. We’re negotiating Ibadan to Kano about $5.3bn, we’re negotiating Lagos to Calabar which is $11.1bn, we’re also negotiating Port Harcourt to Maiduguri which is about $3.30bn.
Where The Loans are Coming From
The complex one is Lagos to Calabar. The Chinese were expected, by the agreement I saw, to source the revenue from China Exim Bank. So we have written to China Exim Bank, we wrote to them last December to remind them of that. At the same time we have had a meeting with the same China Exim Bank to see if we can raise that money.
We’re also going to have a meeting with Credit Suisse to see if they can provide us with a loan at an interest rate we can afford. And there are other groups we’re talking to, be able to come to a conclusion on financing for some of the rail projects.
We’re also initiating a loan facility for Kano to Maradi. That project has been awarded to a Portuguese company called ‘Mota- Engil’ and we’re looking at a new loan facility from Portugal and Germany. I hope we get that loan because if we do, we expect to start construction within first quarter of 2021.
For Port Harcourt – Maiduguri , we’re negotiating with a bank in China.
Assessment Of The Railway Modernisation Programme
I will be the wrong person you should ask that. There’s a saying in my village that a dancer cannot see his back. Only the visitors see whether he’s dancing well or not so you’re the best person to answer the question, not me.
However, I have already acknowledged that the Obasanjo administration started it, we took it up from where they stop.Yes, he started the concept. When I started speaking here I attributed it to Obasanjo, I didn’t say we started it. One good thing about President Buhari is that he warned us “go and complete what you met on the table”. You see the difference between him and others? Other Presidents would like to start their own but what he did was to look at the master plan, look at how it connects economically, anyone that had no impact, drop it.
So what do you do? You look at the entire country, you know that the Western line Lagos to Kano is essential. In fact if you look at what the white man did, if you go to Funtua, Kaura Namoda, that’s Western line. Then Eastern line, Port Harcourt to Maiduguri naturally, which is what we’re rehabilitating now. In fact we’re reconstructing you would understand the impact these lines would have on the economy of Nigeria.
We have just added Port Harcourt to Owerri, Port Harcourt to Bonny to get to the new seaport in Bonny. Then the South-South line which is Lagos to Calabar. If you do these three plus the Central line which we awarded having completed Itakpe to Warri, the Abuja to Itakpe through Baro and getting to Lokoja now gets the whole country connected. The only people that will be left out, which we’re talking about how to manage, will be Sokoto, Kebbi, Taraba, Adamawa.
Why We Are Reconstructing The Narrow Gauge from Calabar to Maiduguri
The standard gauge is nearly $14bn and the country is carrying over $11.1bn load already and you want to put another $14bn? It will be difficult. So what we’re doing is to improve on the narrow gauge. The cheaper thing is to reconstruct, that is we remove the entire old thing and lay new tracks, new train stations, new communications networks, everything at $3.03bn. Then in future, we expect whoever will be President to take over from what we’ve done. Don’t forget that the modernization program is reconstruction, rehabilitation of narrow gauge and later the construction of the standard gauge. That’s why I say modernization.
Is Nigeria Heading Towards A Debt Trap With China?
You should ask the Minister of Finance, I’m not the Minister of Finance. But if I’m to join that debate as a Nigerian, I will ask a simple question, how much have we borrowed so far for the entire railway modernization programme?
I can tell you that in the Ministry of Transport, we borrowed $1.4bn for Lagos-Ibadan, $500m for Abuja-Kaduna, so that’s $1.9bn, so what’s the noise about? But once they hear me announce a contract they assume we have taken the loan. If they hear we have just announced a contract from Lagos to Calabar for $11.1bn, they shout ‘we have borrowed $11.1bn’. And they say ‘this Amaechi man wants to kill us’. If they hear we have approved a contract of PH-Maiduguri and the cost is $3.02bn, they shout ‘Amaechi again!’. If we announce the contract for Kano to Maradi for $1.9bn, they assume we have borrowed it already.
If you see how much bravery Mr Presdient has had to withstand and I know they will think it’s hero-worshipping and I don’t like hero worshipping but I’m saying if you see how much strict discipline the President has endured, don’t forget that the contract for Lagos to Ibadan came down to $2bn at the end of the day less than initially projected. All we borrowed was $1.4bn meaning we’re paying $600m from budgetary provisions. It’s discipline. At a period when we didn’t have money, we’re disciplined enough to raise $600m and pay.
I will tell you one of my experiences in the cabinet which will feature prominently in my book someday. I went to cabinet under the advice of the ministry. When you complete the construction of Lagos to Ibadan, you need to have the rolling stock for Lagos to Ibadan. So what do we do? We decided to borrow $500m from China to buy the rolling stock, locomotives, coaches and all that for purposes of commercial activities in that line. So I went to cabinet for approval of that loan and the then Minister for Finance Kemi Adeosun said ‘no, no, no! Mr. President, I will not accept that, I will rather ask the Minister of Transport to put it in the budget so that we fund it ourselves directly than borrowing $500m. I looked at her, then it was N159bn and they say put it in the budget. I said ok. As I’m talking to you today we have paid almost 50% of the money without having to borrow that money. So all that is what fiscal discipline and a reduction in corruption has done to public expenditure.
China and CCECC contribution to railway development in Nigeria
The way to start first is to say we must show gratitude as a country because if they were not helping, these infrastructure would not have been there. First there’s huge infrastructural deficit in Nigeria in terms of housing, transportation etc. We don’t have enough good roads what many people don’t know is that what causes traffic jams is not too many cars, in fact we don’t have enough cars. I doubt if we have up to 10m cars in Nigeria. The problem we have is that we don’t have roads that’s why we can hardly see traffic in Abuja. The reason why you even see traffic on your way entering into Abuja is because there’s only one entry into Abuja. Now if you construct numerous entries, you will not see traffic. So once you see traffic, you veer off. Compared to Lagos where there are not too many roads if you want to use a road and it is blocked, you’re stuck.
So basically we will show gratitude to China for providing us resources with which we are developing our infrastructure now.
You may ask if the Europeans and Americans did not help Nigeria before the Chinese. They did but the problem we had was that they did not apply the Chinese model, you see the difference? The Chinese model directly funds infrastructural projects that is why every Chinese loan is tied to a project. The Chinese would say ‘Ok, I have $10bn for you but you have to show me the project and give the contract to a Chinese firm. Choose any Chinese firm of your choice. They do the job and we pay them’. So all those monies borrowed from America and Europe, if they had applied this same model, we would not have had deficit in infrastructure. But because they were giving it to public officers, they squandered that money.
So it is discipline and prudent management. You want power?, you say yes. For Mambilla? You say yes. $5bn you want to borrow? Ok, give it to a Chinese firm and China Exim Bank will pay the contractor. So that’s what happened with CCECC.
I must commend the CCECC they’re doing good work and I’m grateful that we’re able to get a European firm to supervise them. Both of them are doing wonderful job and occasionally we have disagreement, it is to be expected with such large project. There are few occasions where we have the issue of quality where the consulting engineer says ‘I don’t agree’ and the company does not want to change. I will go at them and say ‘you must, because this is the man we will hold responsible so you must obey him’ and they obey and have been cooperating to provide Nigerians with good quality infrastructure. Occasionally it may cost us more like the issue of signaling but we’re on track and we insist on quality. I tell people that when there’s a railway accident, it’s not just three or four people that die. If you’re not careful, in their hundreds. So you must construct to the point where you avoid derailment it must be global standard.
CCECC’s Corporate Social Responsibility As It Celebrate 40 Years Of Operations In Nigeria
As much as I criticize CCECC from time to time whenever I work with them, we must also show some level, of gratitude, to them, for delivering constant value and going the extra mile to impact the lives of Nigerians through their CSR programmes. It’s not part of their contract. For instance the Kajola project is not part of their contract, they’re looking at the future. They’re looking at sustainability of the railway modernization programme by building the plant that would manufacture the rolling stock and coaches to feed the programme so the country don’t have to rely on imports. If they want to manufacture wagons from here it means they must be getting orders from Nigeria. No problem at all they can even own it. For me, what is critical is the employment it creates that’s why I ask for them to localize the technology.
The second part is to thank them for the Transport University in Daura, which they have agreed to build. Now what does the university do? It localizes the technology, it teaches Nigerian students how they can construct their own rails, and how they can build their own locomotives and coaches, so that’s what that does for you. We’re grateful because it’s not part of their contract. They can say ‘my contract is XYZ and my profit is XYZ where do you want me to get that money’ but what they have done is to be able to share part of their profits with Nigeria which set the CCECC apart from other Western companies.
The Transport University is going to be built entirely for free by the CCECC.
When we were building Lagos-Ibadan, did anybody believe us? Now people are taking selfies on the train. When I see what’s happening there now I remember what my friend the Minister for Transport told me in Ghana. I walked into the Ghanaian airport and wondered ‘what’s so special about this airport, everyday you hear Ghana airport is better than Nigerian airport’. And he said it’s Nigerian that go there to snap selfies and send to people. That’s just what’s going on in Lagos-Ibadan train. People go take selfies and say it’s like the trains in London and I warn the NRC people that these same people who come here to take selfies, the day they open a door and the toilet is bad they will say ‘oh, it’s bad!’. So you must make sure everything is in perfect condition, that way you continue to get their praises. The day one thing goes wrong, the same people will circulate round the country how bad you are.
Hopes And Plans For 2021 In The Face Of Covid-19
Nothing new. We will continue to carry out where we stopped. A lot of people are scared, I have fears from time to time. But if we keep to COVID-19 rules, we may not get infected. But don’t forget that our tenure is not extended by COVID-19. By 2023, we must leave. If you don’t appoint a new Minister for Transport by then, you will not see anybody here. With that at the back of your mind, we must learn how to live with COVID. The plan of COVID is to kill you, your own plan is to survive COVID, in that case we must devise means of surviving COVID and still be able to perform our responsibilities. That’s why we’re paid monthly by the Nigerian people.
Concerns Over Project Continuity
Ok, you’re talking about sustainability. let me make you laugh. When I was Governor of Rivers state, we built schools, health centers, hospitals, employed doctors, teachers, any place we go into in the rural area, because we devised a means of having contact with the people so when we go, they see the things we have done and they ask questions etc. One question round the state is – what will you do to sustain this project? In fact when we told them we were constructing 190MW power station etc, a lot of people asked how do we sustain this? The answer I gave to them then is the answer I give to you today. I said, you know, I come from a country called Nigeria where everything is possible, so when they ask me are you worried about sustainability, I answer them that to the extent that I am in office and that this government is in office, we will sustain what we are doing. When we leave, we don’t have control of what the next government will do.
