Daily Independent (Lagos)
17 November 2008
editorial
This newspaper enthusiastically welcomes the sensible initiative on the transportation front embarked upon by the Lagos State Government. It is of course still early days, nevertheless the Lagos State Government should be given every support and encouragement in implementing the new policy thrust. For one, it is a welcome departure from the uncoordinated efforts of the recent past. It stands to reason that any mass transit system which does not use a rail system as its fulcrum will have embarked on a valiant but ultimately self-defeating exercise.
What is being proposed by the Lagos state government ought to have been implemented decades ago. However, it is never too late to retrace one's step and embark on a more rationale course of action. Better late, as it were, than never. The new policy thrust which will put the rails at the heart of the new transport policy will require a staggering $1.584 billion to implement. Funding will be sourced mainly from public/private partnerships and the Lagos state government will float bonds to raise N274 billion on the capital market to finance the rail mass transit scheme.
The multi-billion naira project will be made up of two rail lines which will be labelled blue and red lines. The lines are designed to connect the state's main activity centres to Central Lagos. The two rails would intersect at Iddo and cross the Lagoon to Marina using a special bridge. It will also link the soon to be reconstructed Lagos to Badagry expressway. The two lines are part of the seven identified by the Lagos state government as part of a strategic Lagos Urban Rail Network (LRMT) which will use the seven proposed lines as corridors. When developed the lines will be connected to the main centres of economic activity in the state. This arrangement will definitely go a long way in braking the perennial gridlock which have had such a debilitating effect on the state's transportation system. Lagosians will heave a sigh of relief for the state's gridlock has adversely affected the quality of life, heightened individual stress and anxiety levels and has continuously escalated the cost of economic activity in the state. Life, particularly when it rains has often become nightmarish in the state.
This bold, daring and much needed initiative will very sensibly be anchored on the concessionaire model and will be positioned as a public/private partnership. This is eminently sensible. For if it had dared to go it alone, the state government would have been diverting massive funds to one sector alone when there are clearly competing interests for the scarce resources available to it. The state government has prudently worked out a 25-year financial model to estimate the project cash flows and returns for the blue and red lines. Under the sharing arrangement, the state government will bear the $1.199 billion capital cost of infrastructure for both lines. The concessionaire for the Blue line is expected to invest $271 million, although total investment over the 25 ears period of the concession is about $820 million, with an economic Internal Rate of Return (IRR) of about 22 per cent.
On the other hand, the concessionaire for the Red Line would invest an initial $764.4 million with an IRR of about 20 per cent over the 25 year period of the concession.
Work is scheduled to begin early next year and, the project will be ready by the end of 2011.
With this financing projection a public/private partnership will emerge which will see the project through. The transformative effect will be crucial. Moving 1.6 million passengers a day by rail will give a flip to the transportation problems of Lagos. Reducing traffic congestion on the roads will lead to greater economic productivity. Indeed there ought to be significant cost reductions in the movement of cargo and goods. A welcome development for hard pressed consumers. To make the metropolis of Lagos competitive there is a clear need for a comprehensive and integrated approach to public transportation and we are here on the right lines (the pun being fully intended).
It has to be stress that there must be a strong enabling legal environment in addition to solid regulatory guidelines and mechanisms designed to protect the interests of the user as well as consumers in general in terms of pricing, safety and so forth. All the operating terms and agreements must be transparent and open to public discourse and input.
There is also a clear benefit to the environment. The project must be guided by a rigorous environmental impact position. The Central focus here must be the reduction of emissions induced by over reliance on fossil fuel based road transportation.
We fully welcome the determination of the Lagos state government to develop a multi-mode Mass Rapid Transit (MRT) network comprising of BRT, LRMT and Inland Waterways Transmit Systems whose aim will be to ensure reliability, affordability, safety and very crucially, the cleanness of the environment.
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