NCP directs BPE to work with NIAF for funding

THE National Council on Privatisation (NCP) has directed the Bureau of Public Enterprises (BPE) to begin a collaboration process with the Nigeria Infrastructure Advisory Facility (NIAF), which has accepted to fund the consultancy for the development of the roadmap and framework for the concession of the Nigeria Railways Corporation (NRC) tracks.

This was one of the decisions reached following the presentation by the BPE Director General, Benjamin Dikki, at the “Meeting of the Council in 2015” on April 16 in Abuja.

The Public Enterprises (Privatisation and Commercialisation) Act 1999 scheduled the NRC for privatisation and the NCP, in 2002, approved that the enterprise be concessioned to private operators, and provide freight and passenger railway services using the vertical integration model.

According to a statement yesterday by the BPE Head of Public Communications, Alex Okoh, the decision to reform the railways was borne out of government’s desire to avoid the collapse and eventual shutdown of the railways, generally regarded as loss-making, but which is socially and economically important for the nation.

“In view of the funding challenges, the future of rail in Nigeria seems dependent on the efficiency and professionalism which the private sector can bring to improve railway operations,” the statement read.

“The railway reform, restructuring and privatisation programme is specifically aimed at achieving the objectives of providing the framework for private sector-led growth through expanded domestic and foreign investment.”

It is equally to “improve NRC’s ability to provide adequate, safe, reliable and efficient rail services, and reduce NRC’s dependence on the federal budget by introducing private sector investment in the sector.”

The statement further indicated that the new railway bill, presently before the National Assembly, seeks to repeal the NRC Act 1955, provide the appropriate market design and legal framework for the implementation of government’s reform programme.

It also seeks to 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, among others.

“In 2005, the BPE, through World Bank funding, engaged the services of CPCS Transcom as transaction advisers on the concession of the rails,” the statement added.

“The firm had completed about 80 per cent 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 modernisation of the network, which was to replace the existing network with wider gauge.

“Because of lack of funding, the modernisation project was shelved by the Federal Government, which directed that the existing network should be rehabilitated and concessioned to private operators.”

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

Recently, BPE sought the assistance of NIAF on the railway reforms. NIAF has confirmed its willingness to support the bureau in developing a roadmap/framework for concessioning the Nigerian narrow gauge railway network. It also agreed to provide the proposed technical assistance at no cost to government. This collaboration has been approved by the NCP.