Nigeria Starts $3 Billion Upgrade of Key Railway Line

(Bloomberg) -- Nigeria’s government began a $3 billion rehabilitation of a railway line that links major cities in Africa’s most-populous country.

The project marks the latest step in an ambitious plan to create a nationwide rail network intended to aid Nigeria’s economic diversification away from crude oil. The development is designed to revamp a dilapidated 1,443-kilometer (897-mile) line that begins in the southeastern oil hub of Port Harcourt and terminates in the northeastern city of Maiduguri.

The contract “has the objective of resuscitating the once vibrant railway transportation in the eastern corridor of the country,” President Muhammadu Buhari told a ceremony in Port Harcourt via video link on Tuesday. The Nigerian unit of state-owned China Civil Engineering Construction Corp., or CCECC, will carry out the work.

Nigeria has already completed rail segments that connect Abuja, the capital, to the city of Kaduna and Lagos, the main commercial center, with the city of Ibadan. That work was financed by about $2 billion of loans from the Export-Import Bank of China. Mota-Engil SGPS SA, a Portuguese construction company, last month started work on a $1.8 billion line that will link the northern trading hub of Kano to the town of Maradi in neighboring Niger.

The Nigerian government will provide about 15% of the $3 billion cost of repairing the Port Harcourt-Maiduguri line while the rest will come from “a syndicate of Chinese financiers,” Transportation Minister Rotimi Amaechi said at the ceremony.

Critics have questioned the commercial viability of the plans, calling for details on how Nigeria will repay the level of debt the government intends to take on.

CCECC Nigeria will also fund and construct a deep-water port on Bonny Island, about 50 kilometers south of Port Harcourt, Amaechi said.

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