A newly-built train is about to leave Idu Railway Station in Nigeria on Friday, June 17, 2016. [Photo: CRIENGLISH.com]
A Chinese company will take up construction work of two railway projects in Nigeria, said Nigerian Minister of Transportation Rotimi Amaechi Wednesday in an interview with CNBC Africa.
China Civil Engineering Construction Corporation Ltd. (CCECC), one of the subsidiaries of China Railway Construction Corporation, a state-owned construction enterprise, will undertake the construction work of a $ 19.4 billion railway project and the work will last two to three years, said Amaechi in the interview.
The minister also said that The Export–Import Bank of China will provide loans for the construction. According to a report by Thepaper.cn, the railway connecting Lagos and Calabar will cost $11.1 billion and that connecting Lagos and Kano will cost $8.3 billion.
A source close to the construction work told Thepaper.cn that Chinese loans will cover the majority cost of the construction since Nigeria does not have enough capital for such a large-scale project. The source said that CCECC played an important role to raise money.
The two railways, Lagos-Calabar and Lagos-Kano, are two of the symbolic projects of China's railway going global. The contract amounts of the two projects set a record when they were signed, according to the report
The report said that in 2006, before Beijing summit of Forum on China–Africa Cooperation (FOCAC), China and Nigeria signed a contract costing $8.3 billion to build a 1,315-kilometer long railway between Lagos and Kano. It is reported that this project is the biggest international project taken on by Chinese enterprises at this time.
CCECC got the project contract for the Lagos-Calabar railway construction at a contracted amount of $11.97 billion in 2014.
The minister said that China's Exim Bank will provide loans for the project but he did not mention specific amounts.
Reporters from Thepaper did not manage to contact the bank for comments.
The report said that the biggest concern about the project is the source of capital.
The source mentioned above said that China and Nigeria have not reached an agreement on conditions of loans yet and the two countries are on the way to reach the agreement. The source said that China alone cannot provide all loans for the two projects.
Amaechi said in the interview that all the projects could start to construct and Nigeria planned to guarantee CCECC to finish their projects in two to three years.
The source said that Amaechi was too optimistic about the projects because it is a complicated thing to build railways in Nigeria. Contractors should take capital, politics and local governments into consideration, the source told Thepaper.cn.
According to previous reports made by China Radio International, a 186.5-kilometer Nigeria Abuja-Kaduna Railway, constructed by CCECC, started its trial operation on June 17, 2016. The source said that the two countries signed the railway contract in 2006 and the construction work started in 2010.
The source said that capital amount more than anything led to the 5-year construction. Loans from China and Nigeria's supporting capital sources are the primary ones for the Abuja-Kaduna Railway, the source added.