News in Nigeria

Railways back on track?

Last week the local media widely reported that Nigerian Railway Corporation (NRC) would commence passenger rail service between Lagos and Ilorin (Kwara State). The announcement also indicated the completion of track rehabilitation works between Lagos and Jebba (also in Kwara State) by Chinese construction firm China Civil Engineering and Construction Company (CCECC). Although the infrastructure deficit remains significant, this is a welcomed start. The revamping of the country’s rail transport infrastructure forms part of President Jonathan’s broader transformation agenda.

Ø  This is not the first time that a sitting government would try to revamp the country’s rail infrastructure. During his tenure, former President Obasanjo had tried to overhaul the sector by awarding a contract for the design, construction and maintenance of about 1,315km of standard gauge double track lines from Lagos to Kano to the CCECC at a sum of US$8bn. However, the contract was revoked by the Yar’Adua administration on grounds of failure to follow due process.  

Ø  The Yar’Adua administration thereafter approved the contracts for the rehabilitation of the just completed 488km Lagos-Jebba rail track to the CCECC at a cost of N12.2bn (US$83m) and a second contract for the Jebba-Kano track to a local construction firm.

Ø  Aside the problems of dilapidated rail tracks and obsolete equipment etc, a major obstacle to having a fully functional rail system is the Nigeria Railway Act of 1955 which forbids private sector investment in the rail sector.   Nigeria could emulate other countries which have succeeded in privatising all or part of their railways.

Ø  There is some good news of the horizon, thankfully. A new bill to address the bottlenecks faced as a result of the outdated Act and attract the much needed private sector investment is currently before the National Assembly. Although privatisation could go much further in Nigeria, there are several examples where the private sector participation has been encouraged with successful outcomes already (telecom).

Ø  The standard approach adopted by many countries is the use of long-term concessions, typically lasting for 25-30 years. Ultimately the responsibility for maintenance of rail infrastructure such as tracks, signalling equipment and for running freight and passenger service passes on to the concessionaires.