That former President Obasanjo has not been charged for corruption and misappropriation of public funds beggars belief.
Firstly, it was series of allegations on corrupt practices on the power projects. And as if that was not enough, another bombshell was dropped at the ongoing Public Hearing on the $8.5 billion Lagos-Kano Rail Modernisation Project.
The Nigerian government entered into a loan agreement with the Chinese government in order to finance the rail project. In return, the contract was awarded to the Chinese firm CECCC. Under the arrangement, $1.2 billion was dedicated as soft loan to Nigeria for the execution of the first phase of the double track Lagos-Kano rail project covering 1,315 kilometres. However, the Chinese government decided this year to commit only $500 million concessionary loan instead of the $2.5 billion it has earlier agreed with Nigerian under the past Nigerian government. The $2.5 billion was to have attracted an almost zero percent interest rate spread over about twenty years. But, according the Minister, the Chinese government changed its mind advising that that Federal Government may obtain the balance of $2 billion from Chinese Banks at prevailing interest rates. And to add salt to injury, the Federal Government is under obligations to pay between $1.1 billion and $1.4 billion for the cancellation of the project.
I have previously queried the need for upgrading the 1,315km of rail track between Lagos and Kano at a phenomenal cost of $8.5 billion. As far as I am concerned the rail upgrade will serve no useful purpose, and the money could be better spent on developing transport infrastructure in our major cities. The proposed Light Rail in Lagos is only costing a fraction of the Lagos-Kano project and it offers more benefit to commuters in a city of 17 million people.
The way and manner this project has been handled by the Obasanjo government is nothing short of being ‘criminal’. There are two key facts that emerged from the hearing which I consider very serious.
Firstly, it came to light that the project was awarded to the Chinese firm without any regard for the ‘competitive tendering’. It was alleged that President Obasanjo was in a hurry to the give the contract to CCECC as a 'thank you' project for the promised loan concession.
Secondly, it was confirmed that the rail contracts were awarded by the administration of Obasanjo without feasibility study and initial engineering design preparatory for the bill of quantity as required for a contract of such magnitude.
I find it hard to believe that a government will award a contract for $8.5bn without undertaking a feasibility study on its economic viability and also not bother to undertake a competitive tendering process. Why all the rhetoric about ‘due process’? How does the government know that it is getting ‘value for money’? I have once queried the reason behind procuring rail expertise from China, when the Chinese themselves import rail expertise from Europe. What is the track record of the Chinese firm in handling multi-billion dollar infrastructure projects?
It is plausible to argue that we wouldn’t be where we are if a feasibility study was undertaken in the first place. As a rail planner, decisions on whether to construct railways are not taken lightly. Railway infrastructure can be very expensive takes years from concept to implementation. Rail projects are subject to feasibility studies, which include rigorous cost-benefit analysis. I’m positive that if a cost-benefit analysis is undertaken on the Lagos-Kano project, the numbers will never stack up. What sort of patronage level will the rail corridor attract to justify the $8.5 billion cost. The govt should not be investing in long-distance railways at this point, until the transport infrastructures in our major cities are developed. Nigeria is not France, Japan, or Italy. If you check the history of these countries, they have developed a good network local transport infrastructure prior to building long-distance railways. .
Anyway, for Obasanjo to have entered into this contract without following ‘due process’ and undertaking proper ‘due diligence’ is a national tragedy and at the least, he should be prosecuted for misappropriation of public funds.
Saturday, March 14, 2009
Monday, March 9, 2009
Reforming the Nation's Transport Sector
There seems to be growing interest in the development and rehabilitation of the Nigeria’s transport infrastructure. The railway sector for example, has in someway come to the fore of public debate. Stakeholders in the transport industry (both private and public) have being drumming up support for rail development in the country. The Lagos State Government is also currently pursuing the development first Light Rail Transit system in Africa. The challenge that will be faced by Lagos Government will be how to attract private investors in the face of the current global economic recession. Whatever happens, history will judge the State Governor by the passion and the zeal he has demonstrated in terms of solving the traffic menace in Lagos.
What is happening in Lagos can only be seen as positive development for Nigeria. However, it gives a cause for concern that the Federal Government has lost its way in terms of setting up the right framework for the development of a sustainable transport agenda. Proactive state governments such as Lagos are beginning to set the benchmark in the absence of the proper transport leadership from the Federal Govt. This laissez-faire attitude has now resulted ad-hoc transport policies and schemes being propagated across the country. An example is the recent announcement by a private firm Oracle Nigeria Limited that it intends to develop a High-Speed Rail system between Lagos and the Niger Delta at an estimated cost of $7.5bn. This project is expected to be funded through a mix of private capital/equity and public funding/guarantees. The proposed corridor for the HSR is Lagos, Ondo, Edo, Delta, Bayelsa, Rivers, Abia, Imo, Akwa Ibom and Cross River states. According the CEO of Oracle, “this mode of transportation will create relief in a country fraught by road accidents, which according to the World Health Organisation account for over 32,000 deaths in Nigeria every year.” I sometimes wonder if these proposals are well thought through before being put in the public realm. What is the rationale for spending such a colossal amount on developing a HSR between Lagos and Cross River? For what purpose? If it is to cut accident rates on the highway, then what is the function of the Federal Road Safety Corps? Why can’t money be spent on rehabilitating the major highways and make them safer? And also, who says that railway is safer than road transport? A badly maintained railway system can cause as much havoc, if not worse. Ask the Brits about the Paddington train crash of 1995, which killed thirty one and injured over 520 people.
We have also seen the recent ‘flip flops’ by the Federal Government on the proposed Lagos-Kano rail modernisation project. This comes under review once there is a change of Minister. This attitude demonstrates a government that lacks vision and does know what it wants. More importantly, it sends a message to foreign investors about the risk of doing business with the government. And in this current climate of credit crunch, confidence is vital to private sector participation.
It is important now than ever before that the government through the Federal Ministry of Transport assumes its leadership role in terms of re-focusing of our nation’s transport system if President Yar’Adua (and big IF!) wants to achieve is Vision 2020 and Seven Point Agenda. The nation is in the dire need of a Strategic Transport Plan. The plan needs to set out the long term vision of how all sectors (ie rail, road, air, and water) of the nation’s transport system will be developed. I appreciate that there are current challenges been faced in the energy sector, which in someway has a role to play in transport infrastructure development (ie use of electric trains etc). However, the government needs to articulate how the current transport assets will be managed, whilst looking into the future. In fact, such as a strategic plan could inform the debate on power generation because of their interdependencies. There is need for ‘joined up’ thinking across of sectors of government in developing an integrated transport vision.
It beats my imagination that Private Sector Participation has now become a buzz word in government circles. As soon as a government owned corporation has been ‘wrecked’ by corrupt government official and politicians, Ministers start talking about ‘concessioning’, PPP etc. While I’m total support of Private-Public Partnerships because sometimes it is only way you can get things done, the government needs to realise that the private sector, who fundamental aim is to maximize their profit will not set up a vision for state. Instead, the private sector should be engaged and stirred towards helping the nation achieve its vision through proper regulatory mechanisms.
Without being a purist, I will suggest the part-privatization of the Nigeria Railway Corporation. The maintenance and operations of the rail network should be separated. The government should still be tasked with the responsibility of track maintenance, which either can be undertaken in house or out sourced to private companies. The operation of services should however be fully privatized. The existing non-rail assets of the NRC could be used as incentive to attract private investors. There will also need to be a major overhaul of the NRC workforce, which currently consists of unmotivated and ageing staff, who lack skills in modern railway operations and maintenance. The government will need to develop a rail network strategy which will sets out the function and role of existing and proposed rail lines. At present there seems to be no clear distinction commuter rail lines and long distance. Development of commuter rail lines in our growth cities should be a matter of priority. Focus should be on developing corridors along Lagos-Ogun-Oyo, Niger-Kaduna-Kano, Warri-Port Harcourt, rather than high speed rail between Lagos and Kano or Lagos and Niger Delta.
The government also needs to set out a plan for the development and funding of major highways and trunk roads. The ineptitude of the federal government in this area has seen state government taking responsibility for managing federal highways. Maintenance of federal roads should not be politicized. The federal government should handover roads which it considers are not of national significance to state governments. As an example, I will suggest an alternative corridor for the Lagos-Benin expressway. The proliferation of vehicular access by churches and residential development along this corridor has undermined its role and function. The corridor is also a major growth area and intensification of vehicular access will only make it worse.
To be continued……………..
What is happening in Lagos can only be seen as positive development for Nigeria. However, it gives a cause for concern that the Federal Government has lost its way in terms of setting up the right framework for the development of a sustainable transport agenda. Proactive state governments such as Lagos are beginning to set the benchmark in the absence of the proper transport leadership from the Federal Govt. This laissez-faire attitude has now resulted ad-hoc transport policies and schemes being propagated across the country. An example is the recent announcement by a private firm Oracle Nigeria Limited that it intends to develop a High-Speed Rail system between Lagos and the Niger Delta at an estimated cost of $7.5bn. This project is expected to be funded through a mix of private capital/equity and public funding/guarantees. The proposed corridor for the HSR is Lagos, Ondo, Edo, Delta, Bayelsa, Rivers, Abia, Imo, Akwa Ibom and Cross River states. According the CEO of Oracle, “this mode of transportation will create relief in a country fraught by road accidents, which according to the World Health Organisation account for over 32,000 deaths in Nigeria every year.” I sometimes wonder if these proposals are well thought through before being put in the public realm. What is the rationale for spending such a colossal amount on developing a HSR between Lagos and Cross River? For what purpose? If it is to cut accident rates on the highway, then what is the function of the Federal Road Safety Corps? Why can’t money be spent on rehabilitating the major highways and make them safer? And also, who says that railway is safer than road transport? A badly maintained railway system can cause as much havoc, if not worse. Ask the Brits about the Paddington train crash of 1995, which killed thirty one and injured over 520 people.
We have also seen the recent ‘flip flops’ by the Federal Government on the proposed Lagos-Kano rail modernisation project. This comes under review once there is a change of Minister. This attitude demonstrates a government that lacks vision and does know what it wants. More importantly, it sends a message to foreign investors about the risk of doing business with the government. And in this current climate of credit crunch, confidence is vital to private sector participation.
It is important now than ever before that the government through the Federal Ministry of Transport assumes its leadership role in terms of re-focusing of our nation’s transport system if President Yar’Adua (and big IF!) wants to achieve is Vision 2020 and Seven Point Agenda. The nation is in the dire need of a Strategic Transport Plan. The plan needs to set out the long term vision of how all sectors (ie rail, road, air, and water) of the nation’s transport system will be developed. I appreciate that there are current challenges been faced in the energy sector, which in someway has a role to play in transport infrastructure development (ie use of electric trains etc). However, the government needs to articulate how the current transport assets will be managed, whilst looking into the future. In fact, such as a strategic plan could inform the debate on power generation because of their interdependencies. There is need for ‘joined up’ thinking across of sectors of government in developing an integrated transport vision.
It beats my imagination that Private Sector Participation has now become a buzz word in government circles. As soon as a government owned corporation has been ‘wrecked’ by corrupt government official and politicians, Ministers start talking about ‘concessioning’, PPP etc. While I’m total support of Private-Public Partnerships because sometimes it is only way you can get things done, the government needs to realise that the private sector, who fundamental aim is to maximize their profit will not set up a vision for state. Instead, the private sector should be engaged and stirred towards helping the nation achieve its vision through proper regulatory mechanisms.
Without being a purist, I will suggest the part-privatization of the Nigeria Railway Corporation. The maintenance and operations of the rail network should be separated. The government should still be tasked with the responsibility of track maintenance, which either can be undertaken in house or out sourced to private companies. The operation of services should however be fully privatized. The existing non-rail assets of the NRC could be used as incentive to attract private investors. There will also need to be a major overhaul of the NRC workforce, which currently consists of unmotivated and ageing staff, who lack skills in modern railway operations and maintenance. The government will need to develop a rail network strategy which will sets out the function and role of existing and proposed rail lines. At present there seems to be no clear distinction commuter rail lines and long distance. Development of commuter rail lines in our growth cities should be a matter of priority. Focus should be on developing corridors along Lagos-Ogun-Oyo, Niger-Kaduna-Kano, Warri-Port Harcourt, rather than high speed rail between Lagos and Kano or Lagos and Niger Delta.
The government also needs to set out a plan for the development and funding of major highways and trunk roads. The ineptitude of the federal government in this area has seen state government taking responsibility for managing federal highways. Maintenance of federal roads should not be politicized. The federal government should handover roads which it considers are not of national significance to state governments. As an example, I will suggest an alternative corridor for the Lagos-Benin expressway. The proliferation of vehicular access by churches and residential development along this corridor has undermined its role and function. The corridor is also a major growth area and intensification of vehicular access will only make it worse.
To be continued……………..
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