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General News of Thursday, 22 December 2022


Buhari's Port Harcourt-Maiduguri rail promise dashed

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The federal government has disclosed a failure to secure loans in the international debt market to finance the reconstruction of the Eastern Rail Line, dashing expectations the key national infrastructure will be ready in time before the end of the Buhari administration.

President Muhammadu Buhari had last March performed the groundbreaking ceremony to commence the reconstruction of the rail line, which was originally built by the British before Nigeria’s independence in 1960.

“The connection of the railway to a new seaport in Bonny Island and Railway Industrial Park, Port Harcourt is designed to increase the viability and boost transhipment of cargo and freight locally, across the West African sub-region and in the Continental Free Trade Area,” the president had said in his speech, also announcing the complementary seaport and industrial park.

Then, former transportation minister Rotimi Amaechi said the project would be ready before the expiration of the Buhari administration next year.

However, speaking in Abuja on Wednesday, Mr Amaechi’s successor, Muazu Sambo, said the delivery before May 29, 2023, when Mr Buhari’s tenure ends, was no longer feasible citing failure to secure loans to back the financing of the project.

“The question relating to the promise to deliver the eastern line narrow gauge before the end of this administration,” said Mr Sambo, addressing journalists at the State House. “Now, the eastern line is the line from Port Harcourt-Maiduguri, it has been segmented in such a way that the first part of the works covers from Port Harcourt to Enugu.”

“Now, the truth of the matter is that if there was a promise to deliver this line before the end of this administration, this promise is no longer feasible because, when the contract was approved, it was approved on the premise that 85 per cent will be funded through the foreign loan, while 15 per cent will be the counterpart funding for the national budget.

“Since that approval, we have not been able to obtain that 85 per cent foreign loan for this project. We have been funding it through the national budget on the bases of the 15 per cent counterpart funding of the federal government. And therefore, funding has been a major challenge for this project.”

The Eastern Line originally runs from Port Harcourt to Maiduguri connecting 10 states across the South-south (Rivers), South-east (Abia, Enugu), North-central (Benue, Nasarawa, Plateau), North-east (Bauchi, Gombe, and Borno) and slightly North-west because of Kafanchan and the branch line to Kaduna Junction linking the Western Line.

However, in the reconstruction design, the number of the connected states rises to 14 with the addition of Ebonyi, Anambra and Imo in the South-east and Yobe in the North-east in addition to a line linking a proposed new deep seaport in Bonny, an oil and gas logistics hub.

Now, the line that had facilitated inter-region trading and helped drive urbanisation and industrialisation in areas such as Jos and Kafanchan, is a failed infrastructure, thanks to years of mismanagement and corruption.

Under the previous Goodluck Jonathan administration, multi-billion Naira contracts to breathe life into the infrastructure were characterised by massive procurement fraud and poor quality of the contractors, PREMIUM TIMES’ investigations found (here and here). The Buhari administration had to cancel the contract, informing a decision to redesign the project and re-award for reconstruction.

But the government relies on loans to drive up the infrastructural curve as the national economic crisis bites.

With the handling of the Eastern Line project by China Civil Engineering and Construction Company, CCECC, Nigeria had apparently expected a Chinese loan to cover the project’s 85 per cent funding gap.

China is Nigeria’s biggest bilateral lender with at least $6.5 billion given out for nearly two decades, according to an official disclosure to PREMIUM TIMES following an FOI request. Even without a new loan, Nigeria will still be servicing debts to the Asian power till around 2038, the maturity date for the last loans obtained in 2018.

In the current 2022 budget, the federal government’s estimated debt service expenditure is N3.61 trillion, representing about 35.6 per cent of the government’s projected revenue for the year, according to an analysis by PwC.

According to details of the 2022 fiscal performance report for January through April, Nigeria’s total revenue stood at N1.63 trillion while debt servicing stood at N1.94 trillion, showing a variance of over N300 billion.