FG commences privatisation of Nigerian Railway

The Federal Government yesterday directed the Bureau of Public Enterprises (BPE) to commence the privatisation of the Nigerian Railway Corporation (NRC) and other railway facilities across the country.

The National Council on Privatisation (NCP) gave the directive to the BPE and the Nigeria Infrastructure Advisory Facility (NIAF), after its council meeting in Abuja.

Director-General of the BPE, Benjamin Dikki said the decision to reform the railways was borne out of the government’s desire to avoid the collapse and eventual shut down of the railways, generally regarded as a loss making but socially and economically imperative to the nation.

According to him, “The funding challenges facing the future of rail in Nigeria seems dependent on the efficiency and professionalism which the private sector can bring to improve railway operations.”

“The railway reform, restructuring and privatization programme is specifically aimed at achieving the provisional framework for private-sector led growth through expanded domestic and foreign investment; improve NRC’s ability to provide adequate, safe, reliable and efficient rail services; and reduce NRC dependence on the FGN budget by introducing private sector investment in the sector”.

NIAF has committed to fund the consultancy for the development of the roadmap and framework for the concession of the rail tracks of the Nigeria Railways Corporation (NRC).

BPE in a recent meeting with NIAF during which issues relating to the reform of the railways were discussed and BPE requested for assistance. NIAF has confirmed its willingness to support the Bureau in developing a Roadmap/ Framework for concessioning the Nigerian narrow gauge railway network. It also indicated that it would provide the proposed technical assistance at no cost to government.

In 2005, the Bureau, through the World Bank funding, engaged the services of CPCS Transcom as Transaction Advisers to advise in the concession of the Rails. The firm had completed about 80% of the assignment including the concession of the Central Railways (Itakpe-Ajaokuta-Warri line which terminates at Ovu) and the due diligence on the entire rail network before its contract was suspended because of the proposed modernization of the network which was to replace the existing network with wider gauge. Because of lack of funding, the modernization project was shelved by the Federal government which directed that the existing network should be rehabilitated and concessioned to private operators.

The rehabilitation of the Railway system includes track spot renewal of Lagos to Kano and Maiduguri to Port Harcourt lines, supply of 25 new locomotives to boost existing locomotive power base of the corporation, upgrading of carriage and wagon workshops, re-equipping the workshops, supply of service support, strategic rebranding of the corporation, rehabilitation of stations and marshalling yards.

It would be recalled that a new Railway bill which is one of the eight reform bills recently approved by the NCP and Federal Executive Council (FEC) is currently before the National Assembly for passage into law.

The new Bill seeks to among others, repeal the Nigerian Railway Corporation Act, 1955; provide the appropriate market design and legal framework for the implementation of Government’s reform programme; separate the roles of policy making, regulation and operation; provide a platform for the introduction of private sector concessionaires and promote competition in the provision of railway services nationwide.

The Public Enterprises (Privatization and Commercialization) Act, 1999 scheduled the Nigeria Railway Corporation (NRC) for privatization and the National Council on Privatization (NCP) in 2002 approved that the enterprise be concessioned to private operators to provide freight and passenger railway services using the vertical integration model.

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