London based International strategic railway delivery specialist, Rowland Ocholi Ataguba spoke to Daily Trust during his recent visit to Nigeria.
By Chris Agabi
What is your take on the recently commissioned Abuja-Kaduna railway line?
It is a landmark achievement of sorts for our country given our history of big project failure. It is the first standard gauge passenger line commissioned in our history. That alone is worth celebrating but there is much to take the shine off the achievement.
For a start, it was delivered late at nearly 10 years after the initial contract was signed. At over $1billion, it has come in nearly $200million over budget and probably cost $400million more than it should.
The PDP claims that the rail line is its achievement which is being appropriated by the APC.
Is it not the height of mediocrity for a party which was in power for 16 years at a time of unprecedented revenues to claim the construction of a mere 187km of track at nearly twice the cost as an achievement? Should it not concern us that the same Chinese that built the line for us build 5,000km of railway in their country in one year while we take 10 years to build 187km? During the last presidential election, the Jonathan campaign claimed that the line had been completed which was patently untrue.
Let’s talk about the cost. Are you suggesting that the cost has been padded?
Look, the Lagos-Kano contract of which the 187km Abuja-Kaduna is the first phase, is for a total length of 2,733km and was awarded at $8.3billion. This works out to $3.04million per km suggesting that the average cost under the contract for the northern part of the country where the topography is mostly geologically sound flat land and is relatively easier to build on, would be about $2million per km. Now, with the 187km Abuja-Kaduna coming in at over $1billion amounts to about $5.3million per kilometre. That is a variance of over 100% even after discounting for the piecemeal approach!
Can you give us some international comparators?
Well, the same Chinese contractor built the 1,860km TANZAM Railway from Dar es Salaam in Tanzania to Kapiri Mposhi in Zambia for $500million in 1975 which in today’s money is about $3.05billion or $1.6million per km. A railway line built through some of the most difficult terrain in Africa, rising from sea level to some of the highest altitudes in Africa of about 2,500metres crossing contorted mountains, steep and precipitous valleys and deep swamps requiring a total of 22 tunnels, 320 bridges and 147 stations while crossing 4 major rivers. A bridge across one of the rivers is about 50metres high while just one of the tunnels is about a kilometre long. Nothing we are doing compares with this.
Yes, there are other subtle differences such as TANZAM is narrow gauge with jointed rails and a design speed of 110km/h while ours is standard gauge with welded rails and a design speed of 150km/h. None of these can however justify the significant disparity in cost. If anything, ours should on aggregate be cheaper.
So what is responsible for this cost disparity?
That’s the question. The Chinese contractor being a commercial animal, is entitled to seek the highest price that he can obtain but who is defending our collective interest in all of this? We have consultants and public officials supposedly representing our interest but are they really? Really?
Are you suggesting corruption?
I am saying that these costs are exceptional but you can connect the dots if you may. The Lagos-Ibadan segment is the next phase and has been agreed at $1.5billion for 156km of track. This works out to $9.6million per km. At this rate, we could be looking at a total cost of about $17billion to build Lagos-Kano as against the original contract price of $8.3billion. This works out to an average cost of over $6.2million per km as against the original $3.04million per km for the same product and that is assuming no further cost escalation. This does not include the opportunity cost of the $17billion either.
So how can we prevent this new railway line from going the way of our existing shambolic railway?
It’s all in the business model. First we must understand that the railway is a business in competition with the other modes. The railway passenger service between Abuja and Kaduna competes with cars, buses and coaches for patronage. So the 4Ps must be right.
Do you mean the mix of product, place, price and promotion?
Indeed and the NRC is not the appropriate organisation to operate a competitive business against a versatile privately run road transport sector. Nothing in it’s DNA suggests that it can transform into a dynamic and customer responsive operator. When it comes into the arena with 2 locomotives and 5 coaches, where it needs about 20 locomotives and 200 coaches to make an impact, then you can see why the competition is not quaking.
So why can’t the FG buy the NRC the 20 locomotives and 200 coaches to enable it impact the market?
Well, you can also ask about the hundreds of locomotives and thousands of coaches and wagons bought for it in the past. Truth is the private sector is better configured to operate the railway and it is a good thing that the FG is moving to concession the narrow gauge lines to the private sector. It also needs to move quickly to concession the Abuja-Kaduna line before the NRC run it into the ground. The NRC and the FG need to focus on building railway infrastructure and let the private sector operate the business. That is the more cost effective approach but even at that we need the right concession model and a new railway law.
Finally, the Minister for Transportation says that Lagos-Ibadan and Calabar-Port Harcourt would be ready by 2018. Is this feasible?
Well, given our track record, that would be CHANGE indeed.