FG plans to open transport industry to private investment

The Federal Govern¬ment will reduce state control of the transport industry to help ease de¬pendence on crude oil and attract investment in freight rail to move grain and lime¬stone, Benjamin Dikki, direc¬tor general, Bureau of Public Enterprises (BPE), has said.

Eight reform bills drawn up to lift restrictions on private ownership of transport infra¬structure, including ports and waterways, have been put before the cabinet, with four already approved and sent for consideration by lawmakers, Dikki said in a March 21 inter¬view with Bloomberg in Abuja.

“The plan is to create an enabling environment for private sector investments to thrive,” Dikki said. “We’ve seen the reforms succeed in the power sector so it tells us we’re on track.”

The Federal Government handed control of 15 for¬mer state-owned power suppliers to new owners including Munich, Germa¬ny-based Siemens AG and Korea Electric Power Corp. last year, marking the start of a market-driven electric¬ity industry in the country. Johannesburg-based MTN Group Ltd. (MTN) and India’s Bharti Airtel Ltd. are among foreign owners of the coun¬try’s biggest mobile-phone companies after telecommu¬nications was also opened up to private investment.

The new transport laws, which could be passed before the end of 2014, are part of President Goodluck Jona¬than’s attempt to reduce the economy’s reliance on its oil industry, Dikki said. The country relies on crude for as much as 95 percent of foreign-exchange income and 80 per¬cent of government revenue, according to the central bank.

“The reform bills will abro¬gate the monopoly laws that restrict private sector partici¬pation in those sectors,” Dikki said. “Once these bills are enacted, we will be able to do concessions of viable federal roads and existing railway tracks, and even new tracks.”

A lack of planning and funding for Nigerian rail expansion has resulted in a drop in freight-rail capac¬ity to 150,000 metric tons per year, compared with 3 million tons in the 1970s, according to the Transport Amoo

Ministry. Most freight is now transported on worn-out and congested roads.

Feasibility studies on two twin-track railways are in progress, including a 673-kil¬ometer (418 miles) east-west coastal line and a 280-kilom¬eter link between Kogi State and Abuja. Both will be built under a “public-private part¬nership,” transport minister, Idris Umar, said in 2012.

Under the transport re¬forms, the government will focus on policy while a state-owned regulator will be cre¬ated to oversee the industry, allowing “operators to oper¬ate in an atmosphere that is free for entry and exit,” Dikki said. Government funds could be freed for education, health-care and other social welfare projects, he said.