The Federal Government has signed a $3.9 billion agreement with a Chinese firm for the construction of railway from Itakpe to Abuja and construction of seaport in Warri.
The agreement, which is Public Private Partnership (PPP), will have Nigeria cover 15 percent of the entire cost of the project while China Railway Construction Corporation (CRCC) will cover 10 per cent.
The Nation reported that remaining 75 per cent, according to the Federal Government, will be borrowed by the Special Purpose Vehicle (SPV).
To repay the 75 percent loan, the Federal government revealed that the rail would be managed by the CRCC for 30 years after which it would be handed over to the federal government.
The Minister of Transportation, Rotimi Amaechi explained that the government decided to opt for PPP agreement so as to reduce the debt from loans borrowed.
He disclosed these in Abuja on Thursday during the signing of PPP railway agreement for Abuja- Lokoja rail project and construction of Warri seaport between the federal government and a delegation from CRCC led by its Vice President, Wang Wenzhong
Amaechi said: “The signing ceremony that we have today is the first PPP railway agreement for Abuja- Itakpe or Abuja-Baru-Itakpe and Lokoja and it is between Nigeria and CRCC. The agreement is to be 15% Nigeria equity and 10percent CRCC equity and then we will borrow 75 percent as SPV from the Chinese bank.
“We will give them sovereign guarantee and they will give us performance bond that protects our sovereign guarantee. When they finish construction, they will manage for 30 years. When they recover their money, the ownership of the asset will revert back to the government of Nigeria. The 15 percent covered by us will be paid gradually.
“The entire railway for now in Nigeria is constructed by CRCC. I think that the good working relationship we have had with CRCC is the reason we have not been able to engage other companies.”
On transfer of technology and knowledge, the Minister said there was need for the Chinese firm to engage Nigerian engineers and contractors.
He said: “We need you to work with us to develop the knowledge of Nigerians and that is why we emphasized on the universities we are asking you to build. We are expecting that not only will you build, you will provide us with lecturers until we can train our own lecturers.
“Literally, all the railway activities in Nigeria are handled by Chinese firm. The Abuja-Kaduna that is completed was done by CCECC, and the Lagos Ibadan that is nearing completion is also handled by the Chinese.”
Giving update on the Lagos-Ibadan rail, Amaechi said: “I hope they (CCECC) will be able to complete the project before the deadline. We need you to complete it quickly and we have told you that by February, legally by law, the contract signed would have expired. I hope you will complete before that time so that we can commence commercial activities.”