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Solving GE’s narrow gauge conundrum

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Ibadan-Railway

American General Electric’s (GE’s) inconsistency, the Federal Government said has bogged down the Nigerian Railway Corporation’s narrow gauge network, but the GE has debunked the claim, saying that with its $2.2 billion investment, the rail sector will soon witness unprecedented transformation, writes ADEYINKA ADERIBIGBE

Twice, the American firm, General Electric (GE) was penciled to roll out operations on the 1,100 kilometres Lagos-Kano narrow gauge track, one of its concessioned networks last year. But on both occasions, it failed. The first time was in May, while the second was December 2017.

The Federal Government had in May, agreed to put the concessioned terms between both parties to the strictest test by taking it through Transaction Advisers, who will see through all the bobby traps and ensure that the nation avoided inchoate concessions.

The development however stretched negotiations till November with both parties agreeing that operations begin in December. This again was botched.

The Federal Government’s silence over GE’s failure to take off in December was however punctured by the Minister of Transportation, Mr Rotimi Amaechi, who blamed GE for its “inconsistency”.

“GE has been inconsistent,” Amaechi said last forthnight in Lagos, adding: “I don’t want to say they are not transparent, but they have been inconsistent in the whole transaction and that is impeding our progress on managing our narrow gauge.”

Twice, Amaechi had tried to meddle in the transaction to speed up the process. On both occasions, Amaechi admitted failure of his intervention, saying: “Anytime I tried to fast-track the process and ensure that all obstacles are removed and they begin operations, but my interventions always compound the problems.”

He pledged not to interfere again in the transactions but to leave all for “seasoned professional negotiators.”

Under the originally agreed terms, GE, is expected to inject 20 locomotives and 200 wagons into the western line in the first phase of the preliminary agreement, which will span 12 months and take these to  100 and 1,000, respectively, after taking over the entire networks (both Western and Esastern lines).

In a swift reaction penultimate week, GE denied all allegations of inconsistency. GE said it remained committed to changing the ugly narrative of the narrow gauge rail freight and passenger transit business in Nigeria.

Its Executive, Business Development, (Transportation, Nigeria) Mr. Eyo Ekpo, told The Nation that the consortium is still “actively engaged in negotiations with the Federal Ministry of Transportation” and looks forward to finalising the terms of a long-term concession agreement for the national narrow gauge rail system.

Though he refused to disclose the “confidential details” of CE’s discussion with the government, Ekpo, however, disclosed that in the last one year, GE and its consortium partners – Transnet, SinoHydro &APM Terminals, have not only negotiated in good faith, but have invested significant resources. “We have been transparent and diligent in meeting all requests from the government at no cost to the Federal Government,” Ekpo said.

According to him, both parties – GE (and its consortia) and the Federal Government, are at a critical juncture of the project and it expects all contractual agreements to be finalised and fulfilled by the parties before the commencing execution

“The Minister (of Transportation) is fully engaged and we are actively awaiting the government’s written assurances to move forward to project implementation,” he added, insisting that the corporation and its partners are committed to working with the Federal Government in revamping and revitalising the nation’s narrow gauge system.

An insider, who refused to be named, corroborated GE’s position on the project. He said “the firm cannot be toying with a project as sensitive and dear to the government. The firm and its partners he further disclosed are committing $2.2 billion to the narrow gauge and that is not a joke.” It is as determined as the Federal Government to get the necessary agreements signed for actual work to begin.”

The Buhari government is focussed on making the railway work because it is regarded as the bedrock of modern mass transit across the world.

The dawn of the fourth republic have seen successive governments  massively invest on railway modernisation, (which saw it delivering the Abuja-Kaduna standard gauge with Buhari commencing the construction of the $1.5bn Lagos-Ibadan standard gauge rail line).

To continue the rehabilitation and modernisation of the railway, the government chose to seek fresh funds, especially, to standardise the  narrow gauge.

Getting new investor(s), government reasoned, will enable it to concentrate on delivering more standard gauge network across the country. Starting with the abandoned Itakpe-Ajaokuta-Warri standard guage line, which started 36 years ago, Buhari espoused a vision to connect all state capitals, bringing speed train closer to Nigerians.

Though  bidders for the narrow gauge started in 2013, the Buhari administration fast-tracked the process and announced in 2016, GE as its preferred bidder.

The bold move was sequel to appreciable legislative support by the National Assembly, which was set to repeal the obnoxious Nigerian Railway Act of 1954, (which made private investment in the nation’s rail system impossible).

Experts said by inviting GE, the Buhari government attempted to push the nation into global reckoning because it will encourage other big players in the sector to see the viability of playing for profitability in the Nigerian market.

If the transaction sailed through this murky waters, the government will focus more on building more efficient standard gauge network.                  With an adequate link of the nation’s productive centres, the narrow gauge will assist in the rapid development of the agriculture, mining and steel sectors which had remained comatose for over three decades and link same to the sea for export, thus rebuilding Nigeria’s export potentials.

The greatest gain of this transaction, is that continuous rehabilitation of the narrow gauge network will no longer be government’s headache. Outside Lagos-Kano route, which include Lagos, Abeokuta, Ibadan, Ilorin, Kano, Funtua, Zaria, and Kaura-Namoda, the GE will also take over the Port Harcourt-Maiduguri route, which include Port Harcourt, Aba, Umuahia, Enugu, Makurdi, Jos, Gombe and Bauchi to Borno State.

To Amaechi, the rehabilitation of the two corridors will help stimulate export potential. “The narrow gauge will essentially encourage freight movement. We have over 30 million tons worth of freight on the Lagos-Kano route for which presently we are moving slightly above 1000 tons. While the Port-Harcourt-Maiduguri route is currently moving nothing, we are anticipating 11 million tons on that route,” he said.

Besides freight, Amaechi also foresee an upsurge in passenger traffic, as more modern coaches replaces the unsightly ones currently in use to move passengers.

The new proposition is a departure from what obtained with the narrow gauge under the management of the NRC. Intercity shuttle, presently epileptic, with the rusty coaches, will give way to business minded operators out to make profit.

“The old way we do things is absolutely unacceptable. The railway system will not be able to attract any quality passenger traffic with such tradition. We must look at fast-tracking things at the railway,” Amaechi said.

 

The post Solving GE’s narrow gauge conundrum appeared first on The Nation Nigeria.

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