5 July 2019

An online publication had recently alleged that Ghana was constructing 560km railway line for $2biliion, same cost as 156km Lagos-Ibadan rail, and asked whether it was a case of padding or over-invoicing. But the Ghanaian minister of Rail Development, Hon Joe Ghartey, in a statement faulted the online report for factual errors. He noted that the Chinese company (China Railway Construction Corporation–CRCC) had merely signed an MoU with the Ghanaian authority . The MoU is to enable CRCC undertake the feasibility study of the project so as to determine the distance, the Bill of Quantity, the cost etc., of the project. And so, the question of contract award for the project at whatever cost does not arise, “because we have not got to that point at all”.

Latest reports quote the Ghanaian ministry of cancelling the MoU altogether on account of “breach of confidentiality”.

What is more, the CRCC in Nigeria further clarified that the contract in Nigeria was awarded by the Obasanjo administration. So the Buhari administration not only inherited the project, it helped to negotiate the cost downwards, and saved Nigeria about $800 million, as it began the implementation of the awarded contract in phases. Thus the allegation of padding or over-invoicing of the project ”is as untrue as it is mischievous”.

What is however true is that the Ministry of Rail Development in Ghana is constructing 100 kilometer rail, and has obtained loan of $1 billion from Chinese Exim Bank.

Comment:

Looks like someone’s persisting with this misrepresentation of the real story in what is a needful controversy and now introducing new layers of untruths.

It is established that the CRCC mou dimension is just but a diversion and the real comparison is with the Ghanaian European Railway Consortium (GERC) Eastern line electrified double track standard gauge railway from Tema – Accra-Kumasi for about  $2.2bn covering about 630 track km whereas we are building an unelectrified double track standard gauge  railway from Apapa, Lagos-Ibadan for a reported $1.58bn (more likely $2bn) covering about 335 track km. The  comparison is Ghana @ $2.9m/km while Nigeria is at best $4.7m/km.

Now to the new untruths. It was the UMYA government that started the implementation of Lagos-Kano in phases not Buhari, with the Abuja-Kaduna line in 2008 as phase 1. It was continued by GEJ’s government and commissioned by PMB’s in 2016. That’s no.1 new fib.

The second new fib is that they negotiated an $800m discount on this contract. HOW, WHERE?!! 

The original contract for Lagos-Kano awarded by the Obasanjo government in 2006 was a double track standard gauge railway for $8.3bn for 2,744 track km (or $3.02m/km). 

So far, they have built single track Abuja- Kaduna for $1bn covering 187 track km (or $5.35m/km) and are building double track Lagos- Ibadan for reportedly $1.58bn covering 335 track km (or $4.7m/km) producing an aggregate of $2.58bn for 521 track km (or $4.95m/km).

Now, the residual Ibadan – Kano double track, (which includes a single track Minna- Abuja) which is about 2,200 track km has now reportedly been de-scoped to a single track line of only about 930 km and agreed @ $6.68bn (or about $7.2m/km).

In sum, a contract of $8.3bn for 2,744km ($3.02m/km) is now being compared favourably with one of $9.26bn for 1,447km (or $6.40m/km). Note that the per km rate has now more than doubled. So how or where has a discount of $800m been obtained as claimed in this report?

On an even more serious note. The sums of money being talked about in these railway contracts are so large and run into several trillions of naira. That a suggestion of a discount of $800m (N288 bn) could even be so flippantly contemplated invites serious concerns as to the integrity of the contract sums. Does the contract have such margins that the contractor could afford to reduce his price by as much as $800m without a corresponding reduction in scope? Highly implausible. As shown above, someone is trying too hard to mislead. Don’t you just wonder why?

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