Sweden plans more competition on railways in 2010

* Govt champions benefits of gradual deregulation

* Critics say plan will overload railways further

* State railway calls for infrastructure boost first

STOCKHOLM, March 26 (Reuters) - Sweden plans to open up its railways to full competition in 2010, the country's infrastructure minister said on Thursday, as the centre-right government pushes ahead with market-oriented reform.

Infrastructure Minister Asa Torstensson said the deregulation of Sweden's railways could bring passengers the same benefits as the opening up of the airline industry.

"Simply put, it has become easier and cheaper to fly," she said. "Through the proposed legislation for competition on the track, I want to see a similar development on the railways," she said.

Deregulation of passenger traffic will be gradual with the first steps being taken this year in July, according to a proposal submitted to parliament on Thursday.

Traffic will be open for full competition from October 2010.

Critics of the plan say the railway infrastructure is already overloaded and that competition will not help.

Green Party MP Karin Svensson Smith said the plan would allow private firms to "pluck the plums from the cake by getting to compete on the few money-making stretches of line in Sweden".

"The rest of the lines are going to face higher ticket prices or closedown unless regional authorities are prepared to take money from healthcare and put it in public transport."

A spokesman for SJ, the state-owned firm that operates nearly all passenger traffic now, said the company welcomed competition, but infrastructure should be strengthened first.

"Just because there are more companies operating, it won't mean there is more room on the railways," Dan Rosander said.

SJ had sales of 9 billion Swedish crowns ($1.1 billion) in 2008 and made a net profit of 543 million crowns.

Sweden's four-party coalition government came to power in 2006 promising to reduce the role of the state in the lives of the country's inhabitants.