LAGOS - Nigeria and China signed a 8.3 billion dollar contract for the construction of a railway line from the nation's economic capital Lagos to Kano, the largest commercial city in the north, the official News Agency of Nigeria (NAN) reported.

The deal signed in Abuja was in two tranches, including the main contract covering the first phase of the railway modernisation project to be concluded in five years by a Chinese firm, the CCECC, and an Italian consultancy firm, NAN said

NAN did not give the name of the Italian firm.

The accord, signed by the deputy transport minister, Muhammad Aliyu, the president of the CCECC, Lin Rongxin, and officials of the Italian consultancy firm, was witnessed by President Olusegun Obasanjo.

Obasanjo said the rail modernisation project was part of an integrated transportation system for the country covering land, air and maritime transport.

Obasanjo said the construction of the new standard gauge track north-south line was only the first phase of a modernisation programme that would cover two major longitudinal lines, he said.

The second would link the southern oil city of Port Harcourt and the central city of Jos and five latitudinal lines that would also link all the 36 state capitals in Nigeria, he said.

Under the 20-year strategic plan for the modernisation of the transport sector, about 8,000 kilometres (5,000 miles) of standard rail line would be constructed with the first phase covering 1,315 kilometres.

The Chinese recently granted Nigeria a 2.5 billion dollar loan facility of which a substantial amount would be used on the rail project.

Obasanjo also charged the Chinese company to look ahead by projecting possible rail links with neighbouring Benin, Niger and Chad, NAN added.

Lin said the rail contract was the biggest ever in the history of the country, and that of Nigeria/China ties, adding that the project was "a design, construct and maintain project".

He said that about 50,000 Nigerians would be employed during the construction of the rail line.