Abuja — The Federal Government yesterday signed a new agreement with the China Civil and Engineering Construction Corporation (CCECC) for the first phase of the Nigerian Railway Modernisation Project.

The contract estimated at about $875 million and designated as the Phase 1, Segment 1 of the re-scoped railway modernisation project would cover the Abuja (Idu)-Kaduna axis in the new agreement with the Chinese company.

Signing the agreement on behalf of the government, Minister of Transport, Mr. Ibrahim Isa-Bio, noted that the project was reviewed downward from the initial $8.3 billion signed by the President Olusegun Obasanjo administration.

He said: "The former agreement was lopsided. We had to analyse the previous project to make sure it serves the public better. We will work on each one on the unit cost: the bill of quantity, and the legal agreement that was previously signed, to make sure everything follows international regulation standards.

"Then, the cost has been reviewed as some of the costs that were about $1.2 billion have been reviewed to about $875 million, saving the country about $300 million.

"Due to the high cost of the (initial) project and the absence of a funding plan, the present administration decided to review the plan. Also, a lot of issues were discovered which were inconsistent with the policies of this government and they had to be removed, which has led to a downward review of the contract fee," he said.

The minister also gave the falling price of oil in the international market as well as the global economic meltdown as reasons for the review of the project.

"At the time this administration took over, the price of oil had crashed from about $147 per barrel to about $143 per barrel, and we realised that undertaking the railway modernisation project at the original cost of $8.3 billion would lead to a strangulation of the economy, or the forfeiture of other pressing economic needs," he said

Isa-Bio further noted that an Inter-Ministerial Committee was set up by the present government "to re-negotiate and re-scope the project. This culminated in the re-scoping of the project into five segments on stand-alone basis."

He said the $250 million paid to the CCECC and the $8.4 million paid the consultants (TEAM Nigeria Ltd.) by the previous administration would be part of the new contract.

These bases which include Lagos-Ibadan; Ibadan-Ilorin; Ilorin-Minna; Abuja-Kaduna; and Minna-Kano, would now be undertaken separately under the new project, to last over the course of 25 years.

"It may interest you to know that the second segment of the project, that is, the Lagos-Ibadan railway modernisation is almost ready for award. Barring any hitches, the contract will be awarded latest by the middle of next month," he said.