The Nigerian government announced that it has approved the construction of a rail line that will run across Nigeria’s coastal states.
It was revealed that the Nigerian government will contribute $500 million (21.74%), while Chinese banks will provide $1.8 billion (78.26%) of the fund in the form of a loan facility.
During a valedictory press conference, the Minister of Transportation, Rotimi Amaechi, said the project will cover Lagos, Anambra, Delta, Edo, Rivers and Cross Rivers States. He also said it will connect the central rail line that goes to Abuja.
According to Amaechi, “the government has approved for us to seek a loan of $1.8 billion to start work on the coastal rail. The coastal rail is from Lagos to Calabar, So we are taking the segment that starts from Port Harcourt to Warri to join the central line that goes to Abuja”.
He added that “and then another segment that starts from Benin to Onitsha. But as it is going to Onitsha, it will join the central line again at Agbor. The Port Harcourt- Warri line will join the central line at Warri. The Benin-Onitsha line will join at Agbor. They are all part of the coastal rail line which is about $11.1 billion”.
Amaechi revealed that the Nigerian government has also given its approval for the development of the central line. He said a Special Purpose Vehicle would be used to borrow the money from China, on behalf of the government.
He said the government, which will be raising the capital itself, will make a 15 percent equity contribution to the project while the contractor makes a 10 percent equity contribution. The Special Purpose Vehicle that would borrow the outstanding 75 percent would be constituted.
The Transportation Minister said “the Federal government will give a sovereign guarantee to enable them to get a quick loan. In turn, the contractor will give us a performance guarantee. The performance guarantee means that since you have concessioned this project to me after the completion, I will run the seaport and the rail line in such a way that I will pay back in 20, 30 or 40 years time, depending on the agreement reached”.