NIGERIA: OGUN STATE GOVERNMENT DEVELOPS TRANSPORTATION

UNCLAS SECTION 01 OF 02 LAGOS 000007

SIPDIS

SIPDIS

STATE FOR AF/W
COMMERCE FOR KBURRESS
ENERGY FOR PERSON, GAY
TREASURY FOR DPETERS, RHALL, RABDULRAZAK
STATE PASS USTR FOR LISER, AGAMA
STATE PASS TRANSPORTATION FOR KSAMPLE
STATE PASS OPIC FOR ZHAN, MSTUCKART, JEDWARDS
STATE PASS TDA FOR EEBONG, DSHUSTER
STATE PASS EXIM FOR JRICHTER
STATE PASS USAID FOR NFREEMAN, GBERTOLIN

E.O. 12958: N/A
TAGS: ECON EFIN EINV NI

SUBJECT: NIGERIA: OGUN STATE GOVERNMENT DEVELOPS TRANSPORTATION
PROPOSALS

REF: 07LAGOS 794


1. (U) Summary: Ogun State's proposed transportation infrastructure
comprising road, rail, sea and air will help manage the steady
growth in population and economy stemming from its proximity to
Lagos. In collaboration with private sector, the government plans to
build an extensive road and rail network that will link the state to
eastern and northern Nigeria. An agro cargo airport that will back
up the Lagos airports is also in the offing. End summary.

Ogun Plans Integrated Transport System
--------------


2. (U) The Ogun State government outlined plans for an integrated
transportation system at its third Economic and Investment Summit
(Ref). The proposed transportation infrastructure comprising road,
rail, sea and air, will redefine Ogun as a metropolitan state, when
completed. Governor Gbenga Daniel said the state's proximity to
Lagos created transportation challenge for Ogun State residents. As
Lagos's population grew, poor households migrated to Ogun and
commuted longer distances to work, spending 20-30 percent of monthly
income on transportation, he said.

Road Network Links State to the East
--------------


3. (U) Extensive road network will link Ogun to east via Edo State.
Femi Egbeoluwa, Ogun State Bureau of Transportation Executive, said
the government will not directly operate the proposed public
transport system, but has developed regulatory regimes and
strengthened regulatory capacity to encourage private-sector led
growth in the sector. The proposed road network, expected to drive
government's innovative industrial activities in different parts of
the state, will be constructed by investors through Public-Private
Partnership (PPP) initiatives.


4. (U) Among roads to improve access is an East-West road that will
link the state to the east, and the Sagamu-Lagos Expressway, which
will be upgraded to a four-lane dual highway, to ease traffic into
Lagos. Egbeoluwa said investors may toll these roads to recover
their costs. He stated that the payback analyses are promising as a
pilot run on Sagamu-Abeokuta road showed that 44,062 vehicles were
recorded in a week which would yield a net return of USD 800,000 in
annual revenue. With this, he predicted investors can breakeven
within 6 years.

Private Participation in Rail Projects Encouraged
-------------- --------------


5. (U) The state plans to develop rail mass transit systems, such as
light rail transit (LRT) on standard gauge, monorail transit and
suburban rail transit. A 43 kilometer (km) LRT from Iddo to Ifo, is
planned to move between 2,000 to 36,000 passengers per hour per
direction. The LRT, which will serve the Kajola Specialized FTZ, is
estimated to cost USD 344 million. While the 12km monorail, suitable
for the Ogun Guangdong FTZ, because it uses only one rail will cost
USD 25 million.


6. (U) The Suburban Rail Transit, using the existing 48 km Nigeria
Railway Corporation (NRC) facilities from Iddo station to Ifo town,
will cost USD 155 million to upgrade. The 21 Diesel Multiple Units
with 140 coaches with capacity for 12,000 passengers per hour per
direction at peak periods, (that is 10 minutes between trains),will
transport an estimated 500,000 passengers daily, Egbeoluwa said. The
government proposes that the suburban rail system would be a joint
venture between the NRC, Ogun State Government and private
investors.

Ogun Airport: Back Up for Lagos MMA
--------------


7. (U) Ogun plans to build an Agro-Cargo Airport as back up for the
Murtala Muhammed Airport (MMA) in Lagos. MMA cargo traffic volume

LAGOS 00000007 002 OF 002


accounted for 95 percent of all air freight movements in Nigeria in
2005, Egbeoluwa said. The need for a relief airport in Ogun State
is justified increasing in air cargo movement and the fact that MMA
has reached about 93 percent of its installed capacity, he said.
Besides, land constraints in Lagos and steady growth in Ogun State
population and economy have increased the need to transport people
and goods by air. Sanusi Daggash, Minister of National Planning
agreed that the MMA, built in 1978 can no longer meet Nigeria's
needs as a flagship airport and at least two more airports must be
built to augment it, he claimed.


8. (U) The airport, though a government initiative, will be
established as a commercially viable private sector driven project.
It is being planned, designed and developed in partnership with Dar
Al-Handasah, a foreign consulting firm. Martez El-Edin, a Dar
Al-Handasah consultant noted that there is presently no dedicated
cargo handling airport in West Africa. The airport will also provide
cold storage facilities for imports and exports, which are currently
limited at the MMA.


9. (U) According to El-Edin, the first phase of the project will
have an international passenger terminal with two aprons for
passengers and cargo, check-in counters and four passport control
points each in the departure and arrival halls. The airport, which
is only two minutes airtime from both Lagos airports, will have an
airstrip for light to medium cargo and commercial air traffic, and
an aircraft maintenance center to cater for Nigerian and West
African commercial air fleet. Other facilities at the airport will
include a control tower, warehousing and cargo depot, petroleum
product depot, a fire station and a regional light rail hub that
will link the airport to the national rail network.


10. (U) Participants at the conference raised concerns about the
viability of the airport particularly when most cargo flights to
Nigeria depart empty. Aviation experts noted that cargo flights to
Nigeria cost more than they do to other destinations because of
this, and they urged the Ogun State government to ensure that agro
processing and other export industries produce internationally
acceptable products for cargo flights to take back.

Deepwater Port to Receive Bigger Vessels than Lagos
-------------- --------------


11. (U) A new 20km shoreline deepwater port will be located at
Olokola to serve the proposed Ogun/Ondo OK FTZ and OKLNG projects
(see Septel). Egbeoluwa said about 50-60 million tons of cargo are
shipped through deep seaports in Nigeria annually, and the Olokola
port will be able to receive ships with between 11 and 16 meters
drafts which are currently unable to berth at the Lagos ports.

Blair