Ghana national railway company is looking for investors

G hana’s railway has a network of 940 km, which connect three lines: Western, Eastern and Central. These three main lines run from the South to the center of the country but do not reach the North regions. Built during the colonial period (1874-1956), they are narrow cape gauge, single track lines (,067 millimeters wide, or 3 ft 6 inches) continue to serve freight and passenger traffic. In 1957, Great Brirain bequeathed 940 km of rail lines, but barely 13 percent are operational today.

According to a 2010 study by the Ghana Railway Development Authority, ‟over the years this railway network has deteriorated, together with the rolling stock”¹. The agency explains that a lack of maintenance has left the infrastructure in a state of disrepair. Also, according to this report, the rail network does not offer a guarantee of safety.

Ghana railway master-plan targets an expansion of the network from 940 km to 3,800 km between 2020 and 2035. Ghana is looking for US$21.5 billion to fund the extension². The Ghana Investment Promotion Center (GIPC) invites the private sector to invest in the country’s railway network. The Government of Ghana offers public-private-partnership and joint ventures³ to potential investors.

Projects

The Ghana Railway Development Authority (GRDA) conducts renovation and construction projects to maintain the rail network. But GRDA says that the rail network needs modernization and substantial investments. Over the past decade the GRDA has been able to channel its efforts and resources into three key projets. They are:

a. Tokoradi-Huni Valley line

1. On June 15th, 2021, Ghana signed Euro523 million loan with Sweden for the renovation of the 102 km line between Tokoradi and the Huni Valley. Swedish EKN guarantees the loan and Swedish Export Credit Corporation (SEK) provides the funds. Investec Bank (Anglo-South African), provided Euro75.6 million commercial loan to cover the down payment. The deal also included an insurance for the commercial loan through the Export Credit Insurance Corporation (ECIC) of South Africa. Deutsche Bank, Germany, was the lead arranger of the deal⁴.

b. Afreximbank and Ghana Railway Company agreement

1. In June 2023, Afreximbank and Ghana Railway Company signed a rail development and financing project preparation facility. The agreement contains two documents: a ‟Head of Terms” agreement and a ‟Pre-Mandate Letter” to finance the development and construction of an integrated 299-kilometer railway line. This new project will connect Ghana’s western corridor to the Port of Takoradi and provide an essential link to neighboring countries. Mrs Kanayo Awani, Executive Vice President at Afreximbank and Dr. Michael Anyetei, Managing Director, Ghana Railways signed the ‟Head of Terms” for the respective two parties. Under the ‟Head of Terms” of the project, the Bank will finance the feasibility studies. The ‟Pre-Mandate Letter” appoints Afreximbank to prepare the project for raising the debt facility amount, which will amount to US$2.1 billion. The loan is a non-recourse project finance instrument, In other words, the loan is based on future freight volumes instead of the debt capacity of Ghana (i.e. based on future assets and cash flow rather than crediworthiness) .

   Another major rail project is the US$3.2 billion agreement with Thelo DB consortium for the development of the Western Railway Line⁵. In July 2022, the government of Ghana signed an agreement with South Africa-based Thelo DBP Limited (Thelo DB) and Afreximbank. According to Ghanaian authorities, when completed, the Western line will reduce transport costs by 30 percent, increase safety and stimulate trade and economic growth. This railway line will create 5,000 jobs, facilitate the export of minerals and commodities and also generate at least US$950 million worth of trade per year.

c. Acquisition of rolling stock

1. In April 2024, Ghana completed the purchase and acquisition ofbought two diesel-powered trains from Poland to boost the rail transport system. The first new Diesel multiple unit (DMU) train will operate on the Tema-Mpakadan line. The procurement contract with PESA, the Polish manufacturer, offer options for the acquisition of more trains in the future.

1. A larger order or trains will materialize with the agreement between Ghana and Dongfang Electric International Corporation (China). On June 23rd, 2023, the Parliament of Ghana approved a US$243.6 credit facility for the acquisition of new trains⁶. The terms of the loan consist of a repayment period of 10 years, tenor of 12 years, grace period two years, interest rate of six months and Sinosure premium of up to seven per cent of the Supplier’s Credit. The Chinese company will supply the following items:

   • ▪ 9 Passenger Locomotives
   • ▪ 48 Passenger Coaches
   • ▪ 15 Freight Locomotives
   • ▪ 330 Wagons
   • ▪ 11 Shunting Locomotives

1. In November, 2020, the government signed a Lease Purchase Agreement with Messrs VAOB Group (a Ghanaian company) for the supply of two sets of Class IC4 High Speed Diesel Multiple Unit (DMU) trains, togetner with equipment and accompanying spare parts.

Bigger modernization plans

Ghanaian authorities unveiled an ambitious rail development plan during a virtual UN’s 2021 SDG Investment Fair on April 13th–14th, 2021. Ghana needs US$12.9 billion to modernize its decaying rail network⁷. The plan contains new projects for inner-city and inter-city rail transport.

The first new project is an inner-city network. Ghana plans to build a light city rail transit (LRT) network for Kumasi, the country’s second largest city. This project will cost US$5.8 billion project and will start in 2025. The government of Ghana is considering proposals from potential investors for a public-private partnership (PPP).

The second is a 672 kilometers inter-city rail connection called the Central Spine line. It will connect 11 cities to the border town of Paga, near the Burkina Faso border. This project will cost US$3.3 billion. The government will review proposals and prioritize those offering a build, operate, transfer (BOT) model funded through a combination of debt and equity. The authorities will offer a contract with a 30-year concession.

An older but rekindled project is the High-speed Rail System (HRS) presented in 2017 by Thomas Mensah, a US-based infrastructure expert. The HRS will link Accra, Cape Coast, Kumasi, and Tamale. Mensah wants to link this infrastructure to the country’s key economic hubs. The project will connect the bauxite mining sites in the Western regions to the seaport of Tema.

Cross-border transports are an integral part of Ghana’s rail ambitions. Ghana aspires to be a part of the Trans-ECOWAS railway. This is a 550 kilometers East-West, that will connect Aflao (on the Togo border) to Elubo (on the border with Côte d’Ivoire) with a bifurcating line to Keta. The government says that this regional rail project will boost intra-regional trade and bring tremendous socio-economic benefits to Ghana.

A second trans-border rail project is the Railway Interconnectivity project between the Port of Tema near Ghana’s capital and Ouagadougou, the capital of Burkina Faso in the north. Ghana and Burkina Faso signed an agreement for the development of the 1,200 kilometers rail line in 2017. The provisional cost estimate is US$2.2 billion.

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