Mota-Engil SGPS SA, a Portuguese construction company, started work on a $1.8 billion railway line that will connect Nigeria with neighbor Niger.
Transport Minister Rotimi Amaechi concluded a contract with Mota-Engil last month on the 283-kilometer (176-mile) line from the northern trading hub of Kano to the town of Maradi on the other side of the Nigeria-Niger border.
The groundbreaking ceremony at the site of a proposed station in Makira town, Katsina state,
This marks the latest phase of an expanding nationwide rail network intended to boost commerce in Africa’s largest economy and benefit its landlocked, northern neighbor.
It’s also the first that isn’t driven by Chinese construction firms and banks, and will rely on European financing.
The project “is a strategic investment for the present and for the future” that will “open the northern part of the country” by eventually enabling businesses there to evacuate their goods directly to the coast by rail, Manuel Antonio Mota, chief executive officer of Mota-Engil’s African and European units, said in a text message.
The logistical costs currently associated with the region’s dilapidated and dangerous roads “destroys almost any chance of you being a successful exporter,” he said.
Mota-Engil’s local unit is a joint venture with Shoreline Group, an independent Nigerian oil producer.
The nearly $2 billion of financing required for the rail line will be sourced from Europe,
Amaechi said in an interview on broadcaster Channels on Feb. 7. Credit Suisse Group AG, Africa Finance Corp. and German state bank KfW are finalizing loans from export credit agencies, multilateral institutions and commercial banks, according to Mota.
Critics have questioned the commercial viability of the Kano-Maradi line, particularly the priority given to a link to Niger at a time when government revenue is scarce. Niger, with a GDP about one-fortieth the size of its larger neighbor, exported goods worth an estimated $1.54 billion last year, according to the International Monetary Fund.
The government rejects such anxieties, claiming the new railway will be part of a network that will contribute to the revival of the northern economy and help establish Nigeria as the export corridor of choice for companies selling Nigerien goods abroad.
The route will be capable of transporting more than 3 million passengers and a million tons of freight each year when operational, Amaechi said at the ceremony. Construction should take 36 months once the financing is ready, Mota said.
While the Mota-Engil group is based in Portugal, the company was originally founded in Angola in 1946. The firm has previously built or refurbished railways in countries including Malawi, Mozambique and Tanzania, and recently announced other construction contracts in Ghana, South Africa and the Ivory Coast. Mota-Engil agreed in November to sell a minority stake in the company to state-controlled China Communications Construction Corp.