﻿Ghana's Ambitious $21.5 Billion Railway Project - Set to Change The Face of The Country
Countries all over the world recognize the importance of an effective rail network.
Ghana is well aware of its intrinsic worth.
Railroads have the ability to improve transportation, income, infrastructure,
development, productivity, and trade in a favorable way. A well-functioning network
can aid intercontinental and international trade, with far-reaching macroeconomic repercussions.
Ghana's government believes that investing in railway infrastructure will accelerate the
country's economic development. Ghana uses a lot of petroleum per person because 96 percent of its
transportation is by road. Trains can reduce the cost of transportation for both people and cargo,
lowering the cost of goods. Trains may help to reduce poverty by connecting communities,
integrating the labor force and products markets, and providing individuals with extra
opportunities. Farmers can increase their profits by purchasing cheaper agricultural
supplies with the help of a broad route. It can also assist avoid food waste when harvests
aren't transported to markets in a timely manner. Market integration can be achieved
by connecting communities via the railroad, resulting in significant gains. Railway lines
will lower transportation costs for many manufacturing companies,
allowing them to profit from export markets. Crop production, which is a labor-intensive field,
will attract more farmers and other investors. As a result, crop-producing villages will experience
rural growth and urbanization, soon transforming into trading towns with railway stations.
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Construction on Ghana's first railway line began in 1898,
during the country's British colonial administration. In 1901,
the line between Tarkwa, a gold-mining town, and Sekondi, on the coast, opened,
and two years later, it was extended north from Tarkwa to Kumasi, the Ashanti region's capital.
When the country gained independence in 1957, it inherited a working railway system. It had
a nearly 1,000-kilometer rail network at the time, but only approximately a sixth of it is
still operational now. Mishaps and slow speeds are frequent because the system began to deteriorate
in the mid-1970s due to bad management, a lack of maintenance, plus competition from roadways.
In recent decades, the existing 1,067mm gauge colonial-era network has suffered from
underinvestment and neglect, falling from a peak of 947km in 1957 to less than 10% of that figure.
“And even that 10% was hardly working,” Ghartey explains.
“The last time a train ran from Kumasi to Accra on the Eastern route was in 2001. It was 2004 on
the Western line.” Post-independence governments' decades of neglect have brought the sector to its
knees. The cost of restoring Ghana's railway network to normal operation is high.
The Master Plan
The Ghanaian government announced a railway master plan in December 2013,
outlining six stages of development. The restoration of the existing narrow-gauge network
and the development of additional standard-gauge lines to link all regional capitals and eventually
connect Ghana with its neighbors, Côte d'Ivoire, Burkina Faso, and Togo, were among the goals. At
a cost of US$23 billion, this would add more than 4,000 kilometers of track to the network.
The strategy has been endorsed by each administration since its inception.
President Nana Akufo-Addo established the Ghana Rail Authority in 2017 by disbanding
the Ministry of Transport's railway-related components.
The Ghana Railway Development Authority (GRDA) and the Ghana Railway Company Ltd (GRCL),
the owner of rail infrastructure and operator of railway routes, respectively,
are the two implementing agencies of the newly constituted Ministry of Railway Development.
The Ghana Railway Development Authority inked an agreement in July 2017 with the Russian railway
company Geoservice to develop a 947-kilometer line from Accra to Paga, as well as additional routes,
on a build-operate-transfer basis. A plan to connect Kumasi to the north, financed by a
China Exim Bank financing, was also revealed in July 2018. The economic link with the rest of
Africa will be opened up by this "central spine." However, the most significant agreement was signed
in mid-2017, a $19billion deal with China. Ghana will give China 5% or less of its bauxite reserves
in exchange for a variety of infrastructure projects that includes railways network expansion,
bridges, new roads, etc. Ghana has 960m tonnes of bauxite resources, valued at $460bn.
In November 2018, Ghana secured a $3 billion deal with South Africa for the iconic Accra Sky
Train Project. We consider such a project to be a wonderful example of intra-Africa
cooperation aimed at African development by Africans. Connecting Kumasi and Paga,
among the Ministry of Railways Development's other projects, will be a huge accomplishment,
greatly cutting travel time and limiting urban migration. However, $70.7 million will be spent,
and rightfully so, on compensating people whose properties will be affected.
Progress
From July 2016 through July 2020, the first phase of the plan entailed completing prioritized
projects over a four-year period. The 99-kilometer Tema – Akosombo – Mpakadan line connecting Accra
and the Port of Tema has been rehabilitated, and the route reopened in January with a
passenger service for 600 persons. The line also connects the area's free zones to the sea port,
with some facilities built particularly to take use of the city's railway connection.
The Takoradi–Tarkwa railway line is currently under construction. Transnet, the state-owned
rail and freight operator in South Africa, signed a deal with the GRDA and the GRCL earlier
this year to build a 66-kilometer standard-gauge railway line between Takoradi and Tarkwa alongside
the current line in the Western area. The line is critical for freight transportation, particularly
in the mining and agriculture industries. For use on new lines, Ghana's Ministry of
Railways has bought 35 standard gauge locomotives, as well as coaches and freight wagons. In a deal
signed on June 23, a consortium of Chinese businesses led by Dongfang Electrical would
supply the new equipment in collaboration with CRRC Dalian and the CRRC Qiqihar Rolling Stock
Company (QRRS).The order is valued at $US 243.6 million and includes nine passenger locomotives
capable of reaching speeds of 160km/h, 15 freight locomotives, and 11 shunters. Dongfang will also
provide 48 passenger coaches, 230 box wagons, and 100 flat wagons for the project. The first two
locomotives are expected to arrive in June 2021, followed by another seven before the end of the
year. The final 26 locomotives will be delivered over the next 18 months on a flexible schedule.
The order is part of a larger effort to revitalize the country's rail infrastructure that began
in 2018. It includes the modernization of existing narrow-gauge railways as well as the construction
of several new standard-gauge railways. According to Ghana's minister of railway development, Mr Joe
Ghartey, the $US 2.2 billion, 340-kilometer Tema – Accra – Koforidua – Kumasi Eastern Rail line,
which was approved last year, is currently 60% complete. The government and a consortium
of Thelo DB and Transtech Consult, a Ghanaian engineering consultancy business,
signed a Memorandum of Understanding (MoU) on June 17 for the building, operation, and
maintenance of parts of the Western Rail between Huni Valley and Obuasi, and Dunkwa and Awaso. The
collaboration will modernize the railway, assuming care of renovations, operations, and maintenance,
providing telecommunications services, as well as training the local people under the terms of
the deal so as to ensure the continued operation of the line following the project’s completion.
Financing Sources
The government has not made all of the major investments in Ghana's railway system.
Private sector initiatives, such as the installation of the first domestic plant for the
production of concrete railway sleepers (rather than wooden sleepers), indicate that private
businesses are positioning themselves to benefit from the railway boom. According to Richard Dombo,
CEO of the GRDA, additional money acquired through build-own-operate-transfer agreements,
barter agreements, and public-private partnerships is critical to the plan's success.
International interest in rail investment in the country has also been strong. They have
held conversations, for example, with steelmaker ArcelorMittal about acquiring the right to extract
iron ore at Sheini for a price comparable to the cost of creating a rail link between the mine and
the coast for shipping the ore. According to Dombo, Ghana's railway lines have historically
been "engines of progress," and the transportation industry would continue to be critical for future
development. Ghana's government has unveiled plans for three rail projects worth a total of $US 12.9
billion as the country seeks private investment to help it reach its development goals.
The projects are part of the West African country's larger infrastructure development plans,
which will help it meet the Sustainable Development Goals (SDGs) of the United Nations
(UN) and the African Union Agenda 2063. The projects were featured in an investment
brochure created by the government for the UN's 2021 SDG Investment Fair,
along with 13 other projects, in order to generate interest among investors and
attract private finance to accomplish the SDGs and improve Ghana's quality of life
1)The first project is the building of a light rail transit (LRT) network in Kumasi, Ghana's
second largest city, which is a converging point of commercial activity and a vital transportation
hub. It's now in the feasibility stage. According to the administration, the city's economic growth
and fast urbanisation have resulted in traffic congestion, which has stifled growth. The $US 5.8
billion project will begin in 2025 and will be developed as a public-private partnership (PPP),
with debt accounting for 70% of the funding and equity accounting for 30%.
The project will be carried out under a 30-year concession with a net present value (NPV)
of $US 404 million, making it a financially sound investment with rate of return of 15.6%(FIRR),
and a benefit-cost ratio (BCR) of 1.12. 2) The 672km Central Spine line, which
is also in the feasibility stage, will stretch from Kumasi's central business district to Paga,
near the Burkina Faso border, via Mankranso, Bechem, Sunyani, Techiman, Kintampo, Buipe,
Tamale, Walewale, Bolgatanga, and Navrongo. The $US 3.3 billion project is set to begin
construction in 2023 and open in 2029. The project will be completed through
a Public-Private-Partnership (PPP) or a Build, Operate, and Transfer (BOT) contract,
with a 30-year concession and a mix of loan and equity financing. The line will have a $US 945
million net present value (NPV) at an interest rate of 8%, a 9.45 percent FIRR until 2055,
and a 13.2 percent EIRR until 2055 3. The funding brochure also includes
14 early-stage projects, such as the Trans-Ecowas railway, which is at the pre-feasibility stage.
The projected 550-kilometer east-west mixed-traffic line will stretch from Aflao,
Togo, to Elubo, Côte d'Ivoire, with a branch line to Keta.
According to the government, the project will provide great socioeconomic benefits
to Ghana.Through a private-public cooperation, the project is anticipated to begin in 2022
and be finished by 2025. ( PPP). The $3.8 billion project will be financed with debt.
According to the brochure, “in line with global trends, the Ghanaian government is
increasingly seeking solutions to narrow this infrastructure financing gap.”
The private sector is viewed as an important partner in achieving infrastructure development
goals. Annual infrastructure investment will need to reach $US 9.3 billion by 2030 to help achieve
the SDGs. By 2040, Ghana's overall infrastructure spending will have to reach $US 96 billion.
Ghana's finance minister says the government continues to play a major
role in the planned socio-economic transformation of the country. He
says partnership with the private sector is critical in mobilisation of resources
both technical and financial to drive the implementation and attainment of the SDGs.
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