Railway Concessions: FG Starts Evaluation of Bids Submitted by GE, Four Others

The federal government has commenced the evaluation of bids submitted by General Electric (GE) and four other companies in order to determine which company would emerge as the concessionaire of the 3,500km Lagos-Kano and Port Harcourt-Maiduguri narrow gauge railway lines.

Authoritative sources in the Ministry of Transportation and the Nigeria Railway Corporation (NRC) revealed that at the close of submission of bids on Monday, the five bidders who applied were being scrutinised to assess their technical and financial competence to operate the railway lines. Speaking recently to journalists after preliminary discussions with GE, the Minister of Transportation, Mr. Rotimi Amaechi had said government was exploring the possibility of putting to use the 25 locomotives on the 3,500km rail tracks from the Eastern and Western flanks to connect the Northern axis before the full scale concession agreement is sealed in March.

Information made available also indicated that GE was favoured to win the bid, as the 25 locomotives planned for deployment were partly managed by US engineering conglomerate before the collapse of Nigeria’s railway lines several years back.

Because of their non-usage, the minister said the 25 locomotives would need technical repairs and some minor maintenance for them to effectively run on the rail lines at the average speed of 60km/hour.

Asked to comment on the discussions with GE, Amaechi said: “Government is still negotiating with GE to take over the narrow gauge lines in the country, which are from Lagos to Kano to Funtua and from Port Harcourt to Maiduguri to Yobe.”

According to Amaechi, even though the final cost of the deal had not been determined, it may amount to $2 billion, adding that talks and negotiations were still ongoing with the company.

“We have people who will negotiate with GE; the negotiations are still ongoing because we have people (the transaction adviser) who are going to negotiate on behalf of government.

“The 25 locomotives have been with us (NRC) for many years since the time of (Gen. Sani) Abacha, but we are trying to see how they can put them back to use to increase the capacity of the NRC so that there will be train movement between Lagos and Kano and from Port Harcourt to Maiduguri.” he said.

In another development, GE yesterday in Abuja offered to invest in Nigeria’s three refineries in Port Harcourt, Warri and Kaduna.

According to a statement from the Group General Manager Public Affairs of the Nigerian National Petroleum Corporation (NNPC), Ndu Ughamadu, GE said in a presentation to the Group Managing Director of the NNPC, Dr. Maikanti Baru, that if its offer was accepted, it was interested in improving the capacity of the refineries starting with Warri or Port Harcourt before the end of 2017.

The statement said the GE team, which included its Engineering, Procurement and Construction (EPC) partners, off-takers, traders and some financiers, was led by its Global Chairman and Chief Executive Officer, Mr. Jeff Immelt.

The multinational firm’s desire to partner with NNPC on the rehabilitation of the refineries came on the heels of a similar proposal on Monday by Italian oil and gas multinational, Eni, to enter into cooperation with NNPC for the rehabilitation and enhancement of the Port Harcourt refinery.

“We were involved in the tenders that started around last year, which were subsequently withdrawn but our commitment to bringing the refineries on stream is still very deep and we are very serious about it.

“We propose that work commences either with the Warri or Port Harcourt refinery as a pilot, as we have set a target to improve refining capacity before the end of 2017,” said GE in its presentation to the NNPC.

Immelt, according to the statement, explained that as part of the offer, GE and NNPC had identified some major national power projects in the country and were currently developing the scope of intervention in the projects, which have a potential combined capacity of about 4.4 Gigawatts (4,400MW).

GE further pledged its readiness to work with the NNPC to make oil production in the offshore fields profitable for the benefit of both companies and other stakeholders.

It said it would consolidate on its existing working relationship with the NNPC to expand the prevailing power business and help NNPC achieve its vision of becoming the leading power company in Nigeria.

Baru who welcomed the GE team, expressed delight in the interest of the US firm to intervene in some vital operational areas of the corporation.

He noted that GE’s offer that included projects financing would greatly improve the collaboration between NNPC and GE and initiate the planned power projects rapidly.

Baru also welcomed GE’s offer for support to boost the nation’s offshore production and raise the crude oil reserve ratio replacement.

He urged the company to also tap into the opportunities on offer in medical supplies, as NNPC moves to commercial the services of its 52 hospitals and clinics spread across the country in the years ahead.

According to the NNPC statement, GE, with its headquarters in Boston, Massachusetts, is worth $493 billion in assets and its business focus areas include oil and gas, power, water supply, aviation, healthcare, transportation and capital.

Also, acting President Yemi Osinbajo yesterday called on the US firm to speed up its infrastructure engagements in Nigeria.

A statement by his media aide, Mr Laolu Akande, said the vice-president received a delegation from GE led by Immelt.

The statement added that the federal government plans to concession the East-West rail line of the NRC to GE, for which the US firm would be investing $2 billion in the Nigerian economy.

“The company will refurbish the single gauge line and build/assemble train coaches here in Nigeria,” it added.

Addressing the GE delegation, the vice-president said: “It is important we move quickly this year and get things done, whatever it is that is required to make things move faster, let us know.”

In his remarks, Immelt agreed with the acting president that 2017 was critical for GE projects in power, gas and transport infrastructure in Nigeria.

The transportation minister, Power, Works & Housing Minister Babatunde Fashola and Finance Minister Kemi Adeosun were also in attendance at the meeting at the Presidential Villa, Abuja.