Investors keen on rail sector

Business News of Monday, 6 February 2017

Source: thebftonline.com

2017-02-06

Joe Ghartey NewRailway Development Minister, Joe Ghartey.

Investors are queuing to partner government in the rehabilitation and expansion of the country’s rail network from the south to Paga in the Upper East Region, following a bold attempt by the Akufo-Addo-led administration to transform the sector.

Joe Ghartey, Railway Development Minister told the Appointments Committee of parliament that: “Due to the government’s pro-business policies, investors have shown interest to partner government. There are people who are willing to come and do the slippers in Ghana. The slippers are what they put between the tracks to keep it stable.

There is a group that has approached us who want to do the wagons in Ghana and export it to Nigeria. We have to try and get the wagons done in Ghana. Some investors have hinted that they may want to fabricate some parts of railway lines here in Ghana to export to Nigeria.”

Mr. Ghartey, outlining the country’s ambitious railway sector roadmap to revamp the industry said: “Revamping of the railway sector will improve productivity and the lives of Ghanaians, by reducing the stress people go through using congested roads, as they are forced to spend several hours in traffic.

It is estimated that the cost of road haulage is 50 percent more than the alternative of using railway lines. This affects the bottom line of bulk mineral producers, and could threaten the very viability of mining companies.

“To get to Paga we need to invest about US$5million and we are looking at a cocktail of build operate and transform (BOT) and other several examples. We are also looking, if possible, to give it to different contractors as sections. There are stand-alone sections, for example Tamale-Buipe-Paga is a standalone section, and from Buipe to Techiman is another section,” he said

The economy of India, a member of the BRICS-Brazil, Russia, Indian and China, has over the years invested millions of dollars in its rail sector. This has tremendously transformed the economy of the south Asian economy and created millions of jobs and allied industries.

The rail sector in India accounts for six percent of the total employment in the organised sector directly and an additional 2.5 per cent indirectly through its dependent organisations.

East African country, Kenya, realising the economic impact of the rail sector, has invested millions of dollar in recent times in the sector.

Mr. Ghartey believes that we can achieve the desired transformation: “If we manage to make an investment of US$5 billion that will be a massive investment, Kenya did it.”

“What will happen in Ghana if we agree to expand the railway is an economic explosion. What we are thinking about the transformation of the economy can only happen, or will happen the fastest if we invest in the railway.”

He stated that the expansion of the sector will attract more investors into the country, since railway development is linked to economic development.

Joe Ghartey said he will kick-start the rail revolution with the reconstruction of the railways along the Eastern and Western lines, among others and that there will be a close collaboration with the Finance Ministry as these options are being considered.

“We have the Eastern extension and we have the Western extension. Along these lines lie some mineral deposits. The minerals are not economically viable because we do not have access to those places, so we are focusing on redoing the Western line, the Eastern line, of course Tema Akosombo and the Central Spine. The total project is expected to cost about US$21 billion.”

He indicated that government’s intends to strategically partner with the private sector as some investors have already shown interest in investing in the expansion of the railway industry which will cover substantial portions of the country.

He explained that as part of the strategic decision government will government introduce light trains within the cities to be able to facilitate movement within the city.

Enumerating some major challenge, he mentioned funding as the main challenge that will impede the re-development of the sector, adding that government will leverage on the right legal framework to deal with this challenge.

“Finance is a major challenge. We have to create the legal institutional framework that will give us the finance. Luckily for us the president is fully committed to this agenda, fully backing it.

The Finance Minister is also fully backing this agenda and so we have to be able to present what is called bankable projects to the president so that he gives his blessing so that the Finance Minister takes us forward,” he said.

He added that modern trains would be used. “We are going to develop trains that belong to this century. We are moving to trains which move 100 and 120 kilometres per hour.” he said.

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