Central Railway

active

In October 2006 the government of Nigerian, through its Bureau of Public Enterprises (BPE), awarded a 20 year rehabilitate, operate and transfer concession for the country’s Central Railway to private operator Global Infrastructure Nigeria Limited (GINL). The Central Railways consisted of some 329 km of standard gauge lines (1.435-m gauge), running from Itakpe to Warri via Ajaokuta. The railway was not fully finished, as it stopped at Ovu, some 22 km from Warri. Completion of the railway was the obligation of the federal government, not the concessionaire. Under the concession arrangement 90% of the freight moved was initially expected to be steel-industry related. However, this was not a captive railway, as other shippers had access to the line as well, and shipping tariffs were monitored and regulated by the Nigeria Transport Commission (NTC). The concessionaire agreed to pay a fixed concession fee of 25 million kobo ($200,000) per year (some $821,000 million in net present value using a 10% discount rate), plus a $5 million fee for the rolling stock, including three locomotives and 71 wagons. Additionally, GINL agreed to pay variable fees starting three years after the concession was awarded, worth 50 kobo per tone kilometer for up to 164 million tone cargo and 35 kobo per tone for traffic levels in excess of 164 million tones. The contract was offered after a process of direct negotiation between GINL and the government. GINL was a subsidiary of Global Steel Holdings, which was in turn owned by Indian steel giant Ispat. In Nigeria GINL controlled the Nigeria Iron Ore Mining Corporation (NIOMCO) at Itakpe, the Ajaokuta Steel Company (ASCL) and the Delta Steel Company (DSC). The Central Railway was turned over to GINL on January 12th, 2007.