International Strategic Railway Delivery specialist, Mr Rowland Ocholi Ataguba, Chairman of the House of Representatives’ Technical Advisory Committee (TAC) on the Railway Bill and National Transport Commission Bill discusses the transport sector reforms.
What is the import of the transport sector reforms?
The purpose of transport sector reform is to bring our transportation sector into consonance with the 21st century and to enable it contribute meaningfully to our national economic development. It is trite that transportation infrastructure and performance along with other network industries is the backbone on which economic development is nurtured. Our chaotic and underperforming sector is a testament to our failure to harness our potentials and natural endowments.
So what has been going on in the National Assembly?
A number of transportation sector reform bills have been the subject of intensive legislative action by both houses of the NASS. This 8th Assembly has been quite progressive in constituting technical committees to assist it in its work. We have the Railway, National Transport Commission, Ports and Harbours, National Inland Waterways Authority, Federal Roads Authority and the National Roads Fund bills. They are all aimed at restructuring and reforming the transportation sector, to separate policy making from policy implementation, and operations from regulation. They are aimed at deepening private sector participation and to enable sub national governments own and invest in transportation infrastructure.
We have heard these platitudes before. What difference would it make?
Perhaps we have, but this time we have reason to believe that it would be different and make a significant difference. Firstly, most of these bills are not new so they are familiar. Second, both the executive and legislative arms are in sync on these bills for a change and thirdly, the constitution of technical committees consisting of the private and public sectors lend credibility to the review process. Now in terms of the difference that it would make, the starting point of all reform is in the legislation. The Railway Bill for instance repeals an anachronistic railway law which was made over 60 years ago in 1955. A law which vests ownership and control of railways exclusively in the FG making it illegal for anyone but the NRC to own, construct, operate or regulate railways. This is the main reason for the underperformance and failure of our railways. So it would make a lot of difference to repeal it and replace it with a law that separates operations from regulation and opens up the space for others to participate meaningfully in the sub-sector.
Lets talk about the National Transport Commission Bill as this appears to be at the heart of transport reform. Why have a multi sector regulator when you can have one regulator for rail, one for roads and so on? Wouldn’t that make it easier and enable specialisation better?
You would still need an integrator. Such an arrangement would also need co-ordination among the sub-sectors and also falls prey to industry capture. This is where a regulator becomes so attached to a particular sub-sector that he no longer has an independent perspective of the common good. We also have a huge human resource capacity deficit and just don’t have the specialist skills to go round. The multi sector regulator concept harnesses skills across sub-sectors enabling synergy from shared resources. Perhaps an alternative model would be to have two multi-sector regulators, one for economic and the other for safety but then begs the question, why two when you can have one for less?
So which of the existing agencies will be affected by the National Transport Commission?
Everyone involved in transportation will be affected except pipelines for now. In particular, the Shippers Council, FRSC and NCAA will fuse into the NTC. The Federal Ministries of Transportation, Aviation, Power, Works and Housing, NRC, NPA, NIWA, FAAN, NAMA, NIMASA, FERMA, are prescribed agencies and will migrate their relevant regulatory resources to the NTC. NIMASA, mind you deals with shipping and only interfaces with the NTC as the NTC is concerned with ports and harbours, and inland waterways in the maritime sub-sector.
One of the rationalisations for multi sector regulation is the state of reform and technology development in the applicable sectors. Now, the railways and inland waterways have seen little reform since inception. Aviation and ports have seen limited reforms and our roads sector remains at best chaotic. Rail in particular is unlike any other network industry because its technology has changed much slower than say telecoms and it faces greater economies of density than say the electricity industry. Furthermore, investment and operational decisions on the railways require much closer co- ordination than in aviation for instance and the co-ordination of different operations is significantly more complex than in other networks like roads.
Now, the anchor tenant model which I recommend elects one of the existing regulatory agencies as the nucleus of the NTC. This approach solves many problems. The overall number of Agencies is not increased. The NTC takes off from day 1 and makes for an orderly transition as it gives impetus to the structured and timely evolution into a full house. It is also consistent with the FG’s perspective. This contrasts with the emergence of the NCC or NERC which were created as single sector regulators from scratch.
Whereas, the telecoms and electricity industries are single utilities as compared to the NTC which brings four or five sectors under one hat. Transportation also has about 15 MDAs involved in regulation from which resources will be migrated to the NTC. As this would require the fusion of different regulatory cultures, a phased approach in transition may therefore be more pragmatic. Under such an approach, the NTC can start with maritime and rail in the first wave, roads as phase 2 and aviation as phase 3, with the Shippers Council as anchor tenant.
Why the Shippers Council?
Why not the Shippers Council? It ticks all the boxes. It is an economic regulator in the transportation sector. It is also perhaps the best disposed in the current circumstances among the candidates.
How can the NTC be protected from political interference?
You can never completely rule this out but once appointed, the NTC executives are protected by legislation to be sufficiently independent. NCC and NERC are perhaps worthy examples.