Abandoned for 11 years

The intra-city 10-coach metropolitan trains, newly acquired by Lagos State for its Red Line Metro Project, was manufactured in 2011 to run on Amtrak’s Hiawatha line between Milwaukee and Chicago, but the trains were never put into use after Wisconsin officials declined to build a maintenance facility to put them in operation.

In 2010, the newly elected Republican Governor of Wisconsin Scott Walker revoked the $47.5 million rail project deal which his predecessor Jim Doyle signed with Talgo in 2009. Notwithstanding, Talgo continued working on building the train sets purchased by the state at a facility in Milwaukee throughout 2011.

Governor of Lagos State Babajide Sanwo-Olu posing inside the newly acquired train bus on Tuesday 18th January, 2022 at Wisconsin. 

Talgo, thereafter in January 2012, notified the state that the train sets were ready for delivery, but the Wisconsin Department of Transportation refused to accept them and 10 months later, Talgo canceled its purchase contract with the state and instituted a lawsuit against Wisconsin.

The claim alleges the state failed to live up to its purchase agreement and that Walker repeatedly acted in bad faith to frustrate the deal.

Talgo added its claim to include: insurance expenses, labour expenses, attorneys’ fees, transportation costs, and “loss of reputation associated with the state’s personnel continually defaming Talgo’s professional reputation in every conceivable forum.”

However, before instituting the lawsuit in 2012, Wisconsin taxpayers had spent $42 million on the rail project. A settlement was eventually reached in August 2015 where Wisconsin agreed to pay $9.7 million to Talgo and allow the manufacturer keep the trains.

Talgo, on its part, was required to refund 30 per cent of the net proceeds if the trains were sold within three years.

The difficulties with finding a buyer

Finding a buyer for the trainsets took another six years after both parties reached a settlement, costing the manufacturer huge amount in maintenance.

Explaining some of the complexities in finding  a suitable buyer, Talgo’s Vice President of Public Affairs and Business Development Nora Friend said in 2015 that there was a limited pool of buyers.

“We have been trying for three years already and we will continue trying,” she said. “It’s a liability. We have to maintain the trains to keep them like new. We have to insure them. We have to store them.”

A major challenge was the difficulty of using federal money to buy them. The state of Wisconsin used its own money to pay Talgo for the trains, so they were not built following the Federal Government’s Buy America requirements, Friend explained.

As a result, a waiver was required to buy them  using federal money, as states had limited resources in their own coffers.

How Sanwo-Olu raised funds for the purchase

On September 14 2020, Sanwo-Olu sought the Lagos State Assembly to approve the sum of N153 billion for the construction of the Lagos Rail Mass Transit (LRMT), also known as the Red Line and the Blue Line.

According to the proposal, the sum would be sourced through Differentiated Cash Reserve Requirement (DCRR), a financing package put in place by the state government through the Central Bank Nigeria (CBN) and from intervention facilities from First Bank of Nigeria (FBN), United Bank for Africa( UBA), and Zenith Bank.

Although the cost of purchasing the train buses has not yet been made public, N93 billion of the N153 billion was proposed for the financing of the Red Line Rail Project, while the remaining N60 billion would be used for the Blue Line.

The state assembly unanimously gave its approval in October of 2020 and the 37 kilometres Red Line, a project of the Lagos Metropolitan Area Transport Authority (LAMATA) which will have eight train stations – from Agbado to Oyingbo. It is expected to be fully operational in the last quarter of 2022.