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FG may revoke $8bn rail contract

Posted by By Everest Amaefule and Rasheed Bisiriyu on 2008/11/22 | Views: 2532 |

FG may revoke $8bn rail contract


The Federal Government may revoke the $8bn railway contract awarded to a Chinese firm by the administration of former President Olusegun Obasanjo.

The Federal Government may revoke the $8bn railway contract awarded to a Chinese firm by the administration of former President Olusegun Obasanjo.

The Chief Economic Adviser to President Umaru Yar’Adua, Mr. Tanimu Yakubu, who gave the hint during the Abuja Business and Investment Roundtable on Thursday, described the contract as illegal.

Yakubu claimed that since Obasanjo did not present the project and its budget to the National Assembly, the current administration would not condone it because of its stand on rule of law.
"For an administration that prides itself in the rule of law, I don’t see how an illegality will be strictly adhered to in the name of continuity," he said.

The $8bn contract was awarded to Chinese Civil Engineering and Construction Company in 2006 as a turnkey package entailing the design, construction and maintenance of about 1,315 kilometres of s tandard gauge double track railway line from Lagos to Kano.

In 2007, the contractor received $250m as advance payment for the project.
It was the first phase of the nation’s 25-year railway modernisation project initiated by the then Obasanjo administration to raise the travelling speed of passenger trains to 120-150km/h.

The railway line, which passes through eight state capitals and the Federal Capital Territory, was to be completed within 48 months.

Nigeria has a network of 3,505 kilometres (2,178 miles) of narrow-gauge single-track lines, covering nine states.

Most of Nigeria’s 200 locomotives are, however, down.
The government had said $2bn would be obtained as a soft loan from the Chinese government to finance the project.

Last year, the Minister of Transportation, Mrs. Diezani Alison-Madueke, said the Federal Government had raised an inter-ministerial committee to review the contract and determine how to fund the project.

The Minister of Finance, Dr. Shamsudeen Usman, also said that government might review the terms of the Chinese loan for railway projects.

The minister, who spoke in Washington DC, United States, explained that some of the terms of the loan were of concern to the Yar’Adua administration.

However, Yakubu also disclosed on Thursday that 91 per cent o f the Federal Government’s capital budget for 2009 would be spent on infrastructure development because Yar’Adua’s belief in reducing the cost of doing business in Nigeria.

Yakubu, who also hinted that $1.5bn would be spent in 2009 on domestic gas production, said that the Escravos Pipeline would be extended to Umuahia, Ajaokuta, Kano and Nigeria’s border with Niger Republic.

According to him, the planned investment in the gas pipeline is predicated on the belief that availability of gas would transform the nation’s economy.

He said, "The 2009 budget has paraded sufficient allocation for dredging of the lower Niger . There will be rehabilitation of Eastern and Western rail line in Warri to Ajaokuta which will be in 12 months. This is intended to reduce burden on road transportation.

"Regardless of what happens to our export of oil and gas, we are committed to completing these projects. Nigeria ought to be a hub of petroleum products."

Yakubu added that gas processing plants would be funded by the private sector.
Claiming that Nigerians had a quick-fix mentality, he said that Yar’Adua had taken steps to appoint technocrats as ministers that would drive his seven-point agenda.

He explained that the seven-point agenda was evolved to address the inadequacy of the country’s infrastructure.

The presidential aide said, "This administration did not just stumble on the seven point agenda. It is a well thought-out set of solutions to address micro and macro economic challenges in the country.
"Our problem has for long been lack of competition, with cost of doing business in Nigeria higher than in other places. Businesses have had to provide their own infrastructure. The seven-point agenda is a response to the dilemma."

On agriculture, the Chief Economic Adviser said less than 50 per cent of the arable land in the country was being utilised.
According to him, the Federal Government plans to increase the land available for agricultural production.

Based on this expectation, Yakubu insisted that growth rate of 13 per cent for 2009 was feasible.
The Supervising Minister of the Federal Capital Territory , Mr. Remi Babalola, who also spoke at the event, said a necessary and sufficient condition for public private partnerships was a well-built infrastructure base.

Babalola said, "We are realigning our economy to compete in the global contest for foreign direct investment in tandem with our Vision 2020 – a vision in which Nigeria seeks to position itself among the top countries of the world by the year 2020.

"We are re forming the art of governance at the FCT, using concepts in modern management of reducing layers of bureaucracy, enhancing productivity and improving service delivery."

He added that the Yar’Adua administration was forging partnerships with successful cities across the world in order to tap from their experience and upgrade services in the country.

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