CHINESE STATE-OWNED rail company, China Railway Construction Corp (CRCC), has announced that is has signed two contracts in Nigeria and Zimbabwe, worth a total of US$5.5bn.
The two projects include an intercity rail line worth US$3.5bn in Nigeria, the Nigeria Ogun State Intercity Mass Transit Project which will be 334km long, and feature a designed speed of 120kph. The second project is a residential real estate development worth US$1.93bn in Zimbabwe. CRCC, which is majority state-owned and listed in Shanghai and Hong Kong, saw shares rise by more than 6% following the announcement.
Funding for the two projects has yet to be finalised, with likely sources including the China Development Bank, the Asia Infrastructure Investment Bank, and China’s previously announced US$40bn Silk Road Fund. In addition to the already existing funding for the China Development Bank, the People’s Bank of China has announced that US$62bn from the country’s foreign exchange reserves will be utilised for the New Silk Road initiative.
The railway project in Nigeria is the second such project announced in the past six months, with an earlier announcement made in November 2014 that CRCC will build another rail line in Nigeria worth US$12bn.
A wholly-owned subsidiary of CRCC, CRCC China-Africa Construction Ltd, is now the largest rail transit contractor in Africa.
The announcement of the two projects comes in the same week that China’s two top train makers, China CNR Corp Ltd and state-owned CSR Corp Ltd – both in the process of merging to create a US$26bn company – are investigating a possible purchase of a controlling stake in Bombardier’s rail unit.
These two new projects in Nigeria and Zimbabwe follow a large number of infrastructure projects being built by Chinese companies along the New Silk Road, and greater levels of Chinese involvement in infrastructure projects in developing countries.