Reviving Ghana's Railway System
Updated: Aug 30, 2022
The government yesterday signed a rail management agreement with Messrs Thelo DB of South Africa and Transtech Consult Limited of Ghana to upgrade the Western Rail Line to ensure efficient mobility of passengers and freight.
Per the agreement, the Ghana Railway Company Limited (GRCL) will act as the rail operator, while Thelo DB consortium will play the role of a rail manager.
The consortium will work with the African Export-Import Bank (Afreximbank) as the financier and mandated lead arranger to structure and mobilise financing for the development of the Huni Valley to Dunkwa through Awaso and Nyinahin to Eduadin sections of the Western Railway Line, a distance of 300 kilometres. Additionally, the agreement will require the rail manager and the rail operator working together to provide operations and maintenance management of the entire Western Railway Line.
The undertaking will serve as a framework through which Thelo DB consortium is appointed as a service provider for the GRCL in relation to the rail project.
The development of the Western Line forms part of the first phase of the railway master plan which is critical to the success of the integrated aluminium industry being promoted by the government. The Board Chairman of the GRCL, Dr Daniel Adzogble, and the Managing Director, Dr Michael Adjei Anyetei, appended their signatures on behalf of the government, while the Chairman of Thelo DB, Ronnie Ntuli, and the Managing Director of Transtech Consult, Kwame Boadu, signed on behalf of the consortium.
The ceremony was witnessed by the Minister of Railways Development, John-Pater Amewu, and the South African High Commissioner to Ghana, Grace Jeanet Mason.
It also saw the President of Afreximbank, Dr Benedict Oramah, and the President of the African Development Bank Group, Dr Akinwumi A. Adesina, throwing their weight behind the project, which they described as a “game changer”.
They endorsed the agreement via a virtual message they sent to the parties to the agreement. Ahead of the signing, Mr Amewu described the arrangement as very innovative, since it would impose no responsibility on the balance sheet of the government.
He said funding of the project, estimated at $2.1 billion, in addition to what the government had already invested, would amount to about $3.2 billion.
“What is interesting about this arrangement is the fact that the financing arrangement is pledged not against the assets of the GRCL but the future cash flows of the company.
“This innovation, we believe, if it goes on very well, will become a partial index in driving the economic development of the sub-region and it is estimated that Thelo DB will carry this arrangement to other areas within West Africa,” he said. He gave an assurance that the financial closure would be within a period of six months from the signing of the agreement, which was subject to extension.
The minister said the provision of an efficient rail transportation system along the Western corridor would remove some major constraints to economic development through reduction in freight transport cost and fuel consumption, extension of the lifespan of the Western corridor roads, reduction in road maintenance cost and also an improvement in road safety.
He pointed out that the Railway Master Plan of the country, which was first developed in 2013 and revised in 2020, was to serve as a guide for the fulfilment of the vision of the government to systematically develop, modernise and expand the rail network on a new standard gauge.
Mr Amewu recalled that on July 5, 2022, the President cut the sod at Manso in the Western Region to mark the official continuation of the construction of the new standard gauge Western Railway Line from Manso to Huni Valley, which included a connection to the Takoradi Port.
“The project is being financed under a €500-million Deustche Bank credit facility acquired by the Akufo-Addo-led government,” he said.
In his remarks, Mr Ntuli said as a leading company on the continent, Thelo DB was excited to see that African nations and Ghana in particular were now seriously seeking to revive their railway networks, systems and rolling stock, adopting rail reform models, introducing open access and vertical separation, among other innovations.
“Within this, our continent also has the opportunity to place emphasis on the use of technology and digitalisation in the development of new railways and thus leapfrog into the Fourth Industrial Revolution.
“By offering fully integrated railway solutions that are designed for Africa, Thelo DB’s rail management agreement, as is being signed here today, addresses these sector important reforms,” he said.
Mr Ntuli indicated that the company had realised that it was through connected, integrated and efficient transportation networks and systems that Africans could connect with one another, produce and trade their wares and begin to build African industrial supply chains.
“Today, we are proud to present an integrated railway project that we are confident will have a multiplier effect on the Ghanaian economy.
“It is our mission to work together with the ministry and the GRCL on the Western Railway Line, so that by developing world-class infrastructure and delivering operational efficiencies, we can reduce rail transport costs and ensure safety and reliability of railway services on the line.
“We want to stimulate direct and indirect industrial supply chains and related jobs, so that this project may benefit Ghana and its people in the long term,” Mr Ntuli said.