Following the review of the contract terms on the proposed standard gauge railway projects by the China EXIM Bank, the Federal Government will now spend not less than N300billion extra to settle land compensation, insurance, tax and survey.

The project which will commence as soon as the 2017 budget is passed, is a partnership between the Nigerian government and the China EXIM Bank for the building of standard gauge rail projects from Lagos to Kano and Lagos to Calabar.

Before the review of the terms between the two parties, it was 15 percent funding by Nigeria government and 85 percent by China EXIM Bank.

However, the Minister of Transport, Rotimi Amechi said recently the China EXIM Bank explained that their funding agreement was on the exact cost of the project and that other variables like payment for land, insurance, tax and survey wasn’t part of the initial agreement. Thus, the federal government will be paying over N300 billion more as counterpart funding.

Ameachi told some lawmakers at an oversight function that the amount to borrow by the federal government is $6.1bn (N1.87trn) from the Chinese Exim Bank to complete on-going standard gauge rail projects in the country.

According to him, this is because the China EXIM Bank, the funding partner, recently said, they agreed to fund only 78 percent of the rail project and not 85 percent as earlier understood.

The problem we have is that the China EXIM Bank is not funding 85 percent of the project but they are asking for 78 percent” Mr. Amaechi had revealed.

With that new angle, therefore, the China EXIM Bank will only fund the building of the standard gauge rail tracks and rail stations on the rail corridor. Nigerian government will then fund the compensation to the land owners, taxes and insurances where necessary. The minister also revealed that, that was the same terms that later happened on the Abuja-Kaduna standard gauge rail project that has been completed and commissioned last year by President Muhammadu Buhari.

Daily Trust learnt that out of the $1.5bn for Lagos to Ibadan standard gauge project, the federal government is expected to cough out over $300 million that is over N100bn. The same applies to the Kaduna-Kano standard gauge and the Port Harcourt -Calabar.

The Ministry of Transportation also notified that the terms were negotiated by the Minister of Finance and the Ministry of Transportation’s Job is to implement the details.

Part of the review were also variations in the scope of contract with the extension of the rails to the critical sea ports across the country. For instance, the rail will now connect Port Harcourt seaport, the Onne seaport, the Apapa seaport, the Calabar seaport and Warri seaport to maximize the benefit of the railways. With these, there are increases in the cost of contract.

Attempts to get the exact terms of the contract from the Ministry of Finance didn’t yield results as visits to the ministry didn’t yield significant results by our reporter.

Also tweets to the Minister of Finance, Mrs. Adekemi Adesoun’s official twitter handle, @Mrskemiadeosun did not respond uptill press time.

Source: Daily Trust