Abuja, Nigeria :General Electric Co (GE.N) has pulled out of a long-term concession deal with the Nigerian government to maintain and operate narrow-gauge rail lines in the West African country, a procurement process adviser told Reuters on Wednesday.
The Nigerian railway concession project was worth around $2 billion for two lines connecting northern cities to others in the south.
The concession was meant to cover about 3,500 km (2,200 miles) of existing narrow-gauge lines from the southwestern commercial capital, Lagos, to Kano in the north and from southeastern oil hub Port Harcourt to Maiduguri in the northeast.
The government had been due to enter into negotiations last year with GE over a railway project, although Nigeria’s upper house of parliament had said it would probe the railway concession over possible violations by Nigerian officials.
It was not clear why GE pulled out of the concession. The company was not immediately available for comment.
A consortium led by GE had submitted the only bid for the project in partnership with Transnet CGETR.UL of South Africa, Dutch-based APM Terminals and China’s Sinohydro Consortium.
Fola Fagbule, senior vice president and head of advisory at Africa Finance Corporation (AFC), which ran the procurement process after being appointed lead adviser by the government, said Transnet was in discussion to replace GE.
Economic growth in Africa’s most populous nation has been hampered for decades by its dilapidated rail network, built mainly by British colonial rulers before independence in 1960.
General Electric Co. said it’s giving up a Nigerian railway concession and handing it over to Transnet SOC Ltd. in line with its strategy to exit the transportation business.
Agreements GE reached with the Nigerian government “are now being negotiated by Transnet and its consortium partners” including SinoHydro of China and APM Terminals, the Boston, Massachusetts-based company said in an emailed response to questions. GE will focus on infrastructure development in Nigeria in areas such as health care and power, it said.
GE won a contract last year to manage Nigeria’s narrow-gauge rail network in partnership with three other companies. It signed an agreement with the West African nation’s authorities in April to proceed with the interim phase of the narrow-gauge concession that is expected to grow freight haulage capacity in the country ten-fold to 500,000 metric tons annually.
“Transnet has been a trusted partner of GE for several decades,” GE said. “We have confidence in their ability and that of the other consortium members to execute on the rail concession project successfully.”
Nigeria is opening up its rail system to private investors following decades of government control as authorities seek to boost infrastructure in the country that vies with South Africa as Africa’s biggest economy.