FEC okays N11.1b for rail
From Madu Onuorah and Mathias Okwe, Abuja
TO assist Nigeria in her power and gas infrastructure, the World Bank on Tuesday approved $600 million soft credit for the power and gas sectors in the country, according to a statement yesterday in Abuja by the bank's Senior Communications Officer, Mr. Obadiah Tomhodet.
Meanwhile, the Federal Executive Council (FEC) yesterday okayed N11.1 billion for the procurement of 25C25EMPD diesel-powered locomotives for the reactivation of the Nigerian Railway Corporation (NRC).
Tomhodet said the new credit comprises $200 million in IDA credits to assist in network investments and technical assistance to improve electricity supply and another $400 million in Partial Risk Guarantees (PRGs) in support of domestic gas market development. The approval was done yesterday.
Poor infrastructure in the power sector is a key constraint to growth in Nigeria. The project will help the Federal Government's current programme to improve electric power supply to Nigerians, a priority in the government's seven-point agenda for economic development.
The Nigeria Electricity and Gas Improvement Project (NEGIP) will provide for Partial Risk Guarantees (PRGs) in support of Gas Supply Agreements that will increase gas supply to boost power generation which is critical for economic growth of the country. In this way, the project will address one of the critical bottlenecks in the supply chain for power generation and underpin the government's reform efforts in the gas and power sectors.
The project will rehabilitate existing transmission and distribution infrastructure to supply the increased power generated from the improved gas supply to consumers. Benefits to be derived from the project include reliable and improved quality of gas supply by instilling commercial discipline in the gas sector through commercial contracts; reduction of power losses from the electrical grid and improved power quality and reliability. The project involved extensive consultations with government and Civil Society Organisations (CSO) in Nigeria.
Three additional projects for Nigeria were approved by the board yesterday, amounting to $420 million. These are the Second HIV/AIDS Programme Development Project ($225 million) to reduce the risk of infections by scaling up prevention interventions as well as increase access to and utilisation of counselling, testing, care and support services; the malaria booster project ($100 million); and the Lagos Eko Secondary Education project ($95 million).
The additional funding for malaria will help close remaining gaps for net distribution, malaria treatment, diagnostics, awareness raising, behaviour change communication, and engagement of grassroots organisations in the fight against malaria in Nigeria.
The Lagos Eko Secondary Education project will support public secondary education in Lagos State, transforming it into a centre of excellence in Africa, by enhancing the skills of its population through quality secondary education.
Lagos, which accounts for 80 per cent of the country's manufacturing value, needs skilled labour force to support its 2,000 industries and 250 financial and allied institutions. The project will be implemented using grants, performance-based incentives, teacher training and standardised testing of students. Schools, which improved the most in standardised English, Maths and science tests, will receive performance cash grants. Over 500,000 students in 637 public secondary schools will benefit from the project, and more than 5,300 teachers and 1,700 school administrators are expected to be trained under the project.
"The approval of these four projects is a major milestone in our partnership with Nigeria. We are especially excited about the prospect that our support to the power sector might help solve the perennial problem of generation capacity lying idle whilst Nigerians stay without light. I also would want to highlight the malaria project, which will build on the very encouraging results of the Kano bednet campaign last month. We will work hard with our partners in government as well as civil society to ensure that the money will be well used and deliver real results for Nigerians", said Onno Ruhl, Country Director, World Bank, Nigeria.
Minister of Information and Communications, Prof. Dora Akunyili, along with the Minister of Transport, Alhaji Ibrahim Bio, told journalists at the end of the Council meeting that the decision to acquire the locomotives was to strengthen the nation's rail system in readiness for the envisioned Public Private Partnership.
He stated that "nobody will want to buy a dead horse. That is why all the necessary feasibility studies have to be carried out and analysis done on the economic viability of the Nigerian railway."
Bio expressed regret at the comatose state of the nation's rail, stating that government was desirous to create enabling environment and viability of the system before inviting the private sector to participate in the entire exercise.
According to the minister, "A memo was presented and approved for the supply of 25 locomotives. As you are all aware, Nigerian Railways had been comatose for over 20 years, reason being that there has been very low budgetary allocations. Secondly, being that the management for the railways system has not been very good and has not been profitable. So, it has been the idea of Mr. President in his seven-point agenda to revive the NRC so that it can give service to Nigerians.
Hitherto, he also wants to ensure that we improve the inland waterways corporation. The first phase is to buy locomotives, which is one of the major keys for reviving the railway system. Because of the duration of producing locomotive, he has given approval, which has been ratified today; it will take about eight months to 10 months.
"In eight months specifically, we will start receiving these locomotives, followed by rehabilitation which will soon start, the tender processes are going on and we hope that when the locomotives are delivered to us the tracks also will be ready. Ditto, we are going to train the train drivers because the locomotives we are going to get are a bit modernised though they are diesel-driven but their system is not like the former one where they used hydraulic system; these ones use electrical system. So, there is a work package in the agreement to train and build capacity of Nigerian railway staff and their engineers", he added.
He added: "In the area of inland water transportation, today, a memo was also presented in addition to the dredging of the River Niger which is about to start in July. The Council also approved the construction of Oguta Inland River Port, which has been on the drawing board for N2.7 billion with the completion period of 24 months. This is supposed to serve the hinterland waterways transportation, particularly in the area of movement of goods and services within Imo, Anambra and Bayelsa states. I believe with this, Mr. President has shown enough commitment in the execution of his seven-point agenda, particularly in the area of transportation."
Bio noted that all stakeholders had been co-opted in the task to re-position the railways, saying: "What we are trying to do is to bring everyone on board. We have people who want to partner. We have been partnering people like Oando, Dangote who are pure haulers. It will pay them to invest in rail and locomotives than what presently obtains by the number of trucks they put on the road, which has further put pressure on our roads and its attendant risk.
"If Dangote today buys five locomotives, each will pull about 30 wagons and each wagon is equivalent to what a trailer carries, so five multiplied by 30 is about 150. The cost of fuel consumption for one locomotive is equal to same fuel consumed by one trailer, so, it is economically wise. We are preaching that to all of them. I want to say that when General Electric came here, Dangote sought to have a discussion with them because he wants to buy locomotives to put on the track", he added.
Told that Nigerians are skeptical of this re-activation as each government has always not delivered on this promise, the minister said the processes were "not similar because without iota of doubt, the process we are following is more transparent. The Chinese locomotives brought by the Abacha administration were 50, none of them today are on our rail track, they are all bad, maybe the technology is not as good as the one we are buying. What we are buying today is General Electric and they have been in the locomotive production business for over eight decades. For the question of the number of locomotives we have today in the NRC, General Electric locomotives were bought 30 to 40 years ago, they are still the ones we are using today. So that is the difference between what happened before and what is happening now, we are going for the best.
"In the area of concession, Mr. President has given out a target that within the next 44 weeks this rehabilitation and locomotives should dovetail into concessioning agreement. We don't want the Nigerian Railway to be run by government any longer because past experiences have shown that if you use the same management system, it will still collapse. We are hoping that by June next year, a concessioner would have been in place to take over the management of the railway system. If it is concession now nobody will want to buy a dead horse and that is why all the necessary feasibility studies have to be carried out to analyse the economic viability of the Nigerian railway", he added.
" On the status of standard gauge and Chinese contract, there are two issues there. Mr. President and all Nigerians want the standard gauge because it is faster and is modern, but in the wisdom of Mr. President, he wants to have a low hand input. The Nigerian rail track is there and with minimum cost, we can rehabilitate it and it will help in the movement of goods from Lagos to Kano. That is the prime expectation of Mr. President to at least see movement from Lagos to Kano to reduce the pressure on our roads in the movement of these heavy trucks", Bio said.
The minister added: "Nobody has said the issue of standard gauge is contaminated, it is not so. What is there is that Mr. President wants due process followed. That contract was not properly advertised, designed and no proper financial plan. These are issues that we have been directed to visit and we are at the level of completion. He also said because of the economic meltdown, the former President based his payment schedule on excess crude oil and in the current situation, there is no excess and there is cash crunch for this particular project. So it is beneficial for us to reconsider it to ensure that the national economy does not suffer and in the next few days you will hear about that project. We were asked to re-scope into phases, up to five phases so we can execute in phases according to resources of the country."
Akunyili listed other contracts in the agricultural sector to include the dams and irrigation projects to be constructed to include those in Sabke, Katsina State, (N1.19b); Ogbese, Ekiti State (N5.49b); Yobe, Katsina (N6.86b); New Nigeria Farmers project in Kwara (N2.82b); and other irrigation systems in various states (N3.71b).
Two silos are to be built in Abuja (N4.17b) and Uyo (N1.73b) while the FEC okayed the release of N4.73 billion out of the Agriculture Ministry's 2009 budget, being 25 per cent of government grant for a tractor-hiring scheme in conjunction with a private firm.
Following memos presented by the FCT Minister, the council further approved a contract of N331.98 million for consultancy services for designing roads, bridges, drainages and telecommunication facilities for roads around Abuja central area.
Also, a variation of N578.57 million was approved for a contract to complete the construction of the Shehu Shagari Presidential Complex, Abuja. The new contract sum now stands at N3.22 billion. The complex is meant to accommodate visiting heads of states and is expected to be completed in 24 months.
The FEC ratified Yar'Adua's anticipatory approval of more power projects which include purchase of 160 330KV transformers for 1.92 euros, plus N61.97 million; variation of contract sum for construction of Gombe-Yola-Jalingo transmission line to the tune of $13.51 million (now $76.76 million) and another cost variation for the construction of switchyard for Aloji power station with the final cost at $7.63 million, plus N500.3 million.
