By Uche Nnadozie
The recent announcement of the signing of a Memorandum of Understanding (MoU) between the Lagos State Government and the Federal Government to kickstart the 68-kilometre Lagos Green Line rail project has sparked interest and raised questions about the financing model for this ambitious project.
You may recall that Governor Babajide Sanwo-Olu held a meeting with possible financiers during the 2024 Summit of the Forum on China-Africa Cooperation in September. What is more, as the 2025 federal budget was being reviewed, questions were raised as to why a whopping sum was voted for the rail project in Lagos.
This is notwithstanding that the project is expected to enhance connectivity and support economic activities along one of Africa’s fastest-growing industrial corridors (Ibeju-Lekki). It’s essential to clarify the financing options and correct any misconceptions.
PPP model
The financing model for the Green Line rail project is based on a Public-Private Partnership (PPP) arrangement. This model involves collaboration between the state and federal governments, and private sector partners, principally China Harbour Engineering Company. The PPP model allows for shared risks and responsibilities, enabling the project to benefit from private sector expertise and financing.
Federal Government’s counterpart funding
The Federal Government has allocated N146.14 billion as counterpart funding for the Lagos Green Line Metro Rail Project. This funding will be transferred to the Ministry of Finance Incorporated (MOFI), which will manage the counterpart funding on behalf of the Ministry of Transport for the project’s development.
Role of MOFI
MOFI will play a crucial role in the financing and management of the project. As a key partner, will oversee the design, financing, and operation of the project, ensuring that the project is delivered on time and within budget.
Benefits of the financing model
The financing model for the Green Line rail project offers several benefits, including:
– Shared risks: The PPP model allows for shared risks between the public and private sectors, reducing the financial burden on the government
– Access to private sector expertise: The involvement of private sector partners brings expertise and efficiency to the project, ensuring that it is delivered to international standards.
– Job creation: The project is expected to create jobs and stimulate economic activity in the state.
Conclusion
The financing model for the 68km rail project connecting Lagos Island, Victoria Island, Oniru, Lekki, Ajah, and Ibeju-Lekki is based on a PPP arrangement, with the Federal Government providing counterpart funding and MOFI overseeing the design, financing, and operation of the project.
The railway will also enhance the utility of the Lagos-Calabar coastal highway under construction – being that the tracks would be laid at the axis thereby eliminating traffic disruptions in the ever busy Lagos-Epe expressway.