*Gives approval for $2.5bn Coastal rail line
By Adelola Amihere
In other to make the Itapke-Warri rail line more viable, the Federal Government which recently approved the sum of 3.9 billion dollars for the construction of the Central line from Abuja to Itakpe has appointed transaction advisers that will facilitate the Public Private Partnership for the project.
The Minister who revealed this at a valedictory press briefing in Abuja on Thursday said the central line will run from Abuja through Baro to Itapke with a port in Lokoja and a sea port in Warri which have all been approved.
He however disclosed that the government will not borrow any money for the project but will be executed under a public private partnership with a Chinese Company called CCRCCI.
According to him, “the company will raise 10 percent of the equity while the Federal Government will raise 15 percent of the equity. Then we will form an Special Purpose Vehicle (SPV) that will borrow 75percent.
“The Federal Government will give a sovereign guarantee to enable them get quick loan. In turn, the contractor will give us a performance guaranty.
“What is a performance guarantee? A performance guarantee is that since you have concessioned it to me after completion, I will run the sea port and the rail line in such a way that I will pay back the loan between the stipulated time.
“The payment of the loan will be done by the SPV, the Federal Government will guarantee them the loan and in turn the contractor will give us a guarantee that if they call our special purpose vehicle (SPV ), we should call their performance guarantee. If it works, that is a wonderful type of PPP and it was genius for the ministry to have done that”.
Explaining further, Amaechi added that, “We are still negotiating with them, but the Federal Executive Council has approved the transaction advisers to negotiate the PPP agreement.
“I just had a meeting with the representative of the contractor this morning and we hope that we will be able to have a meeting with the ministry represented by the transaction advisers.
“When we do resolve it, it will go back to cabinet for approval, when it is approved, then we can confidently say that the south east has been taken care of and the north east”.
The Minster further revealed that the Federal Government has given approval for a 2.5 bilion dollars loan for the construction of the coastal rail line which runs from Lagos to calabar
He said: “We are taking the segment that starts from Port Harcourt to Warri to join the central line that goes to Abuja. Then another segment that starts from Benin to Onitsha but as its going to Onitsha, it will join the central line at Agbor.
“The Port Harcourt to Warri will join the central line at Warri. The Benin to Onitsha will join the central line at Agbor but they are all part of the coastal rail line.
While shedding light on its repayment plans for loans collected from the China Exim Bank, the Minister admitted that they were yet to repay the 500 million dollars loan used for the completion of the Abuja-Kaduna rail line.
He however advised the management of the Nigerian Railway Corporation to set up a sinking fund account where money outside its operational cost can be saved so as to start the process of repayment even before the Federaled Government pays the loan.
He pointed out that the inability of some countries like Kenya, Somalia and Sudan to pay back their loans is affecting Nigeria’s ability to borrow.
“When we went to China they are now saying look, we can’t lend to you because these people are not ready to pay back. How do we know you are going to pay back,” he stated.