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Loans totalling €600m have been signed to finance construction of a 100 km section of 1 435 mm gauge line on the Western Railway corridor running inland from Takoradi Harbour to Huni Valley.
The existing 1 067 mm gauge Western Railway runs from Takoradi to Kumasi with a branch from Dunkwa to Awaso, totalling 339 km. However, only the 66 km from Takoradi to Nsuta is currently operational.
Construction of a modern line forms part of the government’s plan to update and expand the country’s rail infrastructure, with the aim of increasing safety and providing a more environmentally friendly alternative to lorries and cars.
The new line ‘will be the single biggest railway investment by the country, post-independence’, said Minister of Finance Ken Ofori-Atta. ‘The Western Railway line is key to the haulage of agricultural produce and minerals from the middle belt to Takoradi Port in the south of Ghana. The completion of the line will boost economic activities along the corridor and will reduce cost and time of transporting goods and passengers between the two ends.’
The Western Railway corridor serves a manganese mine at Nsuta, 64 km from the port, and a bauxite mine at Awaso, 239 km from the port. At present, both mines are using road transport. Cocoa was transported by rail in significant quantities until 2006, and there are iron ore deposits which the government anticipates could also be served.
Local company Amandi Investment has been appointed engineering, procurement and construction contractor for the project, with Bluebird Finance & Projects acting as lead financial advisor.
FinancingThe financing package comprises two loans to the Ministry of Finance, with Deutsche Bank acting as mandated lead arranger. A €523m loan covering the bulk of the cost has been fully arranged by Deutsche Bank, and is being backed by Swedish export credit Agency EKN.
A second €75m commercial loan has been arranged and structured by Investec to cover the downpayment on the EKN-backed financing. This is being backed by Export Credit Insurance Corp of South Africa and funded by a syndicate of Investec Bank, Rand Merchant Bank, a division of FirstRand Bank, Nedbank (London branch) and Sanlam Life Insurance acting through its Sanlam Capital Markets division.
‘This deal is the latest in a long line of Deutsche Bank projects in Ghana, helping the government improve the country’s infrastructure’, explained Werner Schmidt, the bank’s Global Head of Structured Trade & Export Finance.
He anticipated that the Western Railway project would ‘help strengthen Ghana’s economic growth by increasing freight and passenger connectivity between the different regions and serving for transport of minerals. The new standard gauge line will create job opportunities, help the environment and improve community safety by reducing the number of vehicles on the roads.’
Schmidt added that the loan had been structured ‘with a strong focus on international environmental and social standards.’
The involvement of EKN and SEK reflects the participation of a number of Swedish sub-suppliers in the project, while ECIC anticipate that the deal would ‘secure significant export contracts and jobs for South Africa as well as intra-African trade.’
This article first appeared on www.railwaygazette.com
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