In Spite Of 2015 Completion Date, Work Is Yet To Begin On $1.5bn Lagos-Ibadan Rail Project
Editor
United Kingdom-based international strategic railway delivery expert and chairman of the Rail Work Group of the Nigerian Economic Summit Group, Mr. Rowland Ocholi Ataguba, sheds more light on the railway loan diversion controversy which has been raging lately
There is the recent news that $600 million of a $1 billion railway loan from China was diverted. What is going on?
President Muhammadu Buhari has directed that an investigation should be carried out. So, perhaps, we should await the outcome. The Lagos-Kano modernization project was to have been completed in 2010 but successive governments have made a dog’s dinner of it such that it is not 20 per cent complete yet. It started to unravel under the Yar’Adua administration and Jonathan simply made things worse.
The former Minister of Finance, Mrs Ngozi Okonjo-Iweala, said that the loan was in respect of the Lagos-Ibadan rail line and not Lagos-Kano, which, she disclosed, was not among the projects listed for funding from the China Exim Bank. Is she correct?
No, she is mistaken. Lagos-Ibadan is actually Phase II of the Lagos-Kano project. Abuja-Kaduna is Phase I. The Lagos-Kano contract was awarded in 2006 by the Obasanjo government for $8.3bn. It was to be funded with a $2.5bn soft loan from the China Exim Bank and the rest from the Excess Crude Account which, at the time, had about $50bn in it. Obasanjo had secured the agreement of the three tiers of government for this funding arrangement. He had also obtained the approval of the National Assembly for the loan.
So what went wrong?
The contract was signed in October 2006 and the Chinese contractor immediately started work with the ground-breaking perform by Obasanjo at Kajola in November, 2006. Obasanjo left in May 2007 but managed to cause a problem by not fully making the down payment of about $2bn to the contractor. The down payment was due 14 days after contract execution. Instead, he paid only $250m and asked that the balance be obtained from the China Exim Bank loan.
