File image: IOL

ABUJA - Nigeria has commenced R546 billion railway expansion to reduce dependence on oil and diversify its struggling economy by improving transport links to allow the movement of goods around the country and to ports.

“The plan we have now will go to every nook and corner,” said transport Minister Rotimi Amaechi, in an interview. 

Africa's biggest oil producer is currently undergoing the worst economic Africa’s biggest oil producer is going through its worst economic collapse in 25 years. 

This slump follows a dive in the price and output of oil, which accounts for more than 90% of foreign income and two-thirds of government revenue. 

As presented by President Muhammadu Buhari’s Economic Recovery and Growth Plan presented in March, it seeks to boost agriculture and manufacturing by developing the country’s transport network and power infrastructure.

Rail expansion

Critical projects include building a second railway line connecting the nation’s two biggest cities, the commercial capital, Lagos, and Kano in the north. 

The projected 1100km line will carry freight and passengers. 

The government also expressed plans to construct a coastal railway that connects Lagos to the eastern city of Calabar.

The two new railways are expected to cost R262.8bn, of which most of the funding will be sourced from the Export-Import Bank of China, which has so far released R77.5bn.

China’s Civil Engineering and Construction is building the project. 

Amaechi said that both railways should be ready by the end of 2019. 

Multinational corporation, General Electric is leading a group that’s rehabilitating Nigeria’s 3505km of century-old, narrow gauge railways linking the coastal cities of Port Harcourt and Lagos with the north.

The group, including SinoHydro of China, South Africa’s Transnet and the Netherlands’ APM Terminals, will fund, revamp and operate the railways for a period to be decided in negotiations with the government, the minister said. 

They won the concession in May.

The expansive group plans to invest R28.9bn, says Sabiu Zakari, permanent secretary in the Ministry of Transport. 

Nigeria will subsequently have two links between Lagos and Kano. 

The new Chinese-built link will allow trains to travel twice as fast as they can on the existing link.

The West African nation is also opening up its rail system to private investors after decades of government control.

Military rule

While the nation was in political flux during military rule,  freight-rail capacity was cut to 15 000 tons a year in 2005, from 3 million tons four decades earlier, according to the transport ministry.

As a result, most goods are currently transported on worn-out and congested roads.

Transnet however has the capacity to move more than 70 million tons of coal to one South African port annually.

“The rail in Nigeria was neglected for too long,” said Oke Maduegbuna, managing partner at transportation and logistics consultancy Pete, Moss & Sam.

According to the transport ministry, an additional  R210.2bn will be invested in rail routes to link up all the country’s state capitals and extend across the northern border into neighbouring Niger’s southern city of Maradi. 

- BLOOMBERG