19 October 2017

Nigeria: How Nigeria Will Benefit From Borrowing to Construct New Rail Lines - Amaechi

The Minister of Transportation, Rotimi Amaechi, says Nigeria will benefit immensely if it takes loan request to build new rail lines.

Speaking before the Senate Committee on Local and Foreign Debts, Mr. Amaechi said the fund will be used in completing the the Itape-Warri rail line and to begin the Kano to Kaduna and Port-Harcourt to Calabar rail lines.

The Senate committee had invited the minister and some members of the executive to explain how Nigeria can pay back the proposed loans from proceeds from the projects they would be expended on.

President Muhammadu Buhari had on Tuesday October 10 written the Senate to approve the federal government plan to apply for a $5.5 billion loan to fund some capital projects, including the Mambilla hydro-power project, construction of the second runway of the Nnamdi Azikwe International Airport, counterpart funding of rail projects and construction of Bonny road with a bridge across Opobo channel.

Mr. Amaechi, while explaining the economic viability of the proposed rail projects, said Nigeria may not experience development until it grows its rail system.

"I will like to quote someone in a conference I attended two days ago. He said there are three items a country needs to develop its economy; power, iron which is the steel industry, and the third one is the railway. He said if any of these doesn't exist, there can't be development. I'm sure that's why we are having problems in the growth of the Nigeria economy.

"After the completion of these rail lines and when we have new locomotives, it's going to contribute tremendously to the growth of the economy. Imagine the impact on agriculture alone. Imagine the deflation, drop in price that will happen if agricultural products are conveyed seamlessly to the market.

"We can get return on the funding in long term through freight because the money is in freight and not the passengers. We have over 30 million tonnes of goods that is tied down between Lagos and Kano alone. If you check our seaports, goods are tied down because of Apapa road.

"What we plan between now and December is to ensure that we truck it with the narrow guage to Ebute Meta for those who want to distribute around Lagos and they can also take it from there by road while we continue by rail to Kano and other parts of Nigeria," he said.

He said the Ministry has covered all state capitals with its rail design and only requires funds to construct the rail lines. He said the country has concluded plans to receive 17 new coaches by December.

Ten of these coaches, he said, will be deployed to the Kaduna to Abuja rail line while the remaining seven will be used on the Itape to Warri line.

While justifying the addition of the second runway of the Nnamdi Azikwe International Airport among projects to be funded by the loan, Minister of State for Aviation, Hadi Sirika, who also appeared before the committee, said the country loses more economising the use of one runway.

"Airport operations efficiency gets enhanced when you have a second runway. For example, when you have lots of airplanes on the ground, waiting to take off on a single runway and spending time between up to 20 minutes and can't take off because they have the aircraft of another airliner using the existing runway, that means the gentleman who is flying that aircraft will spend 20 minutes more burning fuel.

"And when he wants to land in another airport, he spends another 20 minutes. So, in this kind of operation, you can easily spend two hours of time burning fuel and sitting just there. It is uneconomical for both the user and the business owner. Part of the functions of government is to promote businesses and make it very efficient to do."

Mr. Sirika said that economic viability of another runway will depend on the use to which the airport is put.

"Airport depends on the activities you create around it to make it viable," he said.

"Many people will come and park their aircraft and pay. That alone generates several millions of dollars elsewhere.

"We can go into agricultural export and we can create tourism activities around airports for people to come and see. Maintenance can also bring money."

The committee chaired by Shehu Sani, (APC-Kaduna) will submit a report to guide the Senate in considering the loan request.

Nigeria

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