Nigeria Plans to Open Transport Industry to Private Investment

Nigeria will reduce state control of its transport industry to help ease dependence on crude oil and attract investment in freight rail to move grain and limestone, the country’s privatization agency said.

Eight reform bills drawn up to lift restrictions on private ownership of transport infrastructure, including ports and waterways, have been put before the cabinet, with four already approved and sent for consideration by lawmakers, Benjamin Dikki, director general of the Bureau of Public Enterprises, said in a March 21 interview in Abuja, the capital.

“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.”

Nigeria handed control of 15 former state-owned power suppliers to new owners including Munich, Germany-based Siemens AG and Korea Electric Power Corp. last year, marking the start of a market-driven electricity industry in Africa’s second-biggest economy. Johannesburg-based MTN Group Ltd. (MTN) and India’s Bharti Airtel Ltd. are among foreign owners of the country’s biggest mobile-phone companies after telecommunications was also opened up to private investment.

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

New Tracks

“The reform bills will abrogate the monopoly laws that restrict private sector participation 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 capacity to 150,000 metric tons per year, compared with 3 million tons in the 1970s, according to the Transport 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-kilometer (418 miles) east-west coastal line and a 280-kilometer link between central Kogi State and Abuja. Both will be built under a “public-private partnership,” Transport Minister Idris Umar said in 2012.

Under the transport reforms, the government will focus on policy while a state-owned regulator will be created to oversee the industry, allowing “operators to operate 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.

To contact the reporter on this story: Elisha Bala-Gbogbo in Abuja at ebalagbogbo@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net John Bowker, Robert Valpuesta

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