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A $3.9 billion deal has been reached between the Federal Government (FG) and a Chinese firm to construct a railway from Itakpe to Abuja and a seaport in Warri.

The Details: The construction is expected to be funded via a Public-Private Partnership (PPP). Nigeria will contribute 15% to cover the project, the China Railway Construction Corporation (CRCC) will contribute 10% while the remaining 75% will be borrowed through a Special Purpose Vehicle (SPV).

For the 75% loan to be serviced, CRCC would manage the rail for 30 years before the Federal Government gets back full control.

[READ MORE: NNPC, CPDC sign $875.75 million deal]

FG inks $3.9 billion deal with Chinese firm for construction projects 

Why PPP was adopted: Giving further insights into the deal, Rotimi Amaechi, Minister of Transportation explained that the PPP agreement was adopted to avoid accumulation of debts.

He gave this disclosure when the agreement was signed for both projects between the Federal Government and a delegation from CRCC led by its Vice President, Wang Wenzhong.

The signing ceremony that we have today is the first PPP railway agreement for Abuja- Itakpe or Abuja-Baru-Itakpe and Lokoja and it is between Nigeria and CRCC. The agreement is to be 15% Nigeria equity and 10percent CRCC equity and then we will borrow 75% as SPV from the Chinese bank.

We will give them sovereign guarantee and they will give us performance bond that protects our sovereign guarantee. When they finish construction, they will manage for 30 years. When they recover their money, the ownership of the asset will revert back to the government of Nigeria. The 15% covered by us will be paid gradually.

The entire railway for now in Nigeria is constructed 100 by CRCC. I think that the good working relationship we have had with CRCC is the reason we have not been able to engage other companies.”

FG inks $3.9 billion deal with Chinese firm for construction projects 


The Minister also asked the Chinese firm to transfer their construction knowledge to Nigerian engineers in a bid to help them build capacity.

We need you to work with us to develop the knowledge of Nigerians and that is why we emphasized on the universities we are asking you to build. We are expecting that not only will you build, but you will also provide us with lecturers until we can train our own lecturers.”

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He noted that several railway activities were handled by Chinese firms. Some of the examples he cited are the Abuja-Kaduna railway constructed by the CCECC and the Lagos-Ibadan rail project which is under construction.



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