21 November 2018

Nigeria: $1.5bn Lagos-Ibadan Fast Rail - Cabinet Gets Cost Overrun Request From Amaechi

Photo: Premium Times
Nigerian railway.

Lagos — As construction work on the 156km Lagos-Ibadan standard gauge rail progresses, Minister of Transportation Rotimi Amaechi is expected to present a request to the Federal Executive Council (FEC) for cost overrun, Daily Trust can report.

The project was awarded at the cost of $1.5bn to China Civil Engineering and Construction Company (CCECC) but there are indications that government would overshoot the budget following variations not included in the original contract details.

Sources told Daily Trust at the weekend that the variations were being finalized by the technical team and various committees to be presented to the minister for onward presentation to President Muhammadu Buhari.

Daily Trust had reported in December last year, when the project had barely progressed, that a cost overrun was inevitable going by submissions of stakeholders in the project.

Apart from the cost of relocating some facilities, especially the Nigerian Army 81 Ordinance Corps in Yaba which is estimated at over N5 billion, there is also the relocation of oil and gas pipelines within the Lagos axis.

Also, the commitment of government to connect the rail line to the country's premier port in Apapa comes at a huge cost going by recent presentations made to the minister by the contractor and technical consultant.

Also, the Apapa Port rail sidings initially estimated at 2.4km in the project are now to extend to 6.4km for seamless connection of the standard gauge to all port terminals.

All these items are being fine-tuned for presentation to the FEC after going through the Bureau of Public Enterprises (BPE) for requisite clearance, a source said yesterday.

The request may get to the president latest by the end of December, it was learnt.

Amaechi last week led the Project Steering Committee and the CCECC officials to Apapa Port to assess the level of work to be carried out there.

After the inspection visit which had the Managing Director of the Nigerian Railway Corporation (NRC), Engr. Fidet Okhiria and his counterpart in the Nigerian Port Authority (NPA), Hadiza Bala Usman, in attendance, it was discovered that some warehouses owned by terminal operators would be partly demolished to ease the rail connectivity.

The terminals to be mostly affected are the APMT and Eni Consortium terminals.

"Most of these things were not envisaged in the original project but this is not strange in a project of this magnitude and the government is determined to execute things that would stand the test of time," the source, who pleaded anonymity because he was not authorized to talk to the press, said.

Amaechi had in reaction to the cost overrun said, "What is best is what we will do. We will go back to Mr President for us to get approval so as to get something that will outlast us."

Also speaking, the NPA MD explained that there are areas government would take over from terminal operators "for overriding public interest."

However, she assured that necessary compensation would be paid to operators whose structures would go completely or partially.

Usman reiterated that the necessary rehabilitation would be carried out at the key sides where ships usually berthed to increase their weight and capacity to accommodate the standard gauge rail.

She said, "All these aspects need to be computed and the number to be presented to the Hon. Minister and in turn he would make the necessary request for approval to the Federal Government."

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