Rehabilitating the railways: Improved rail links would take strain off the road network

Railway rehabilitation and expansion has long been seen as critical to increasing exports and improving Ghana’s transportation network, particularly given the more constrained linkages to the north of the country and to both cocoa- and gold-producing regions. Carrying freight by rail could significantly improve the security and price of domestic shipping, For the past four years officials at the Ghana Railway Corporation and Ghana Railway Development Authority (GRDA) have been slowly moving forward on a massive railway improvement plan, beginning with the rehabilitation of lines in and around Accra and finishing with an expansive network covering the entire country and connecting Ghana to its neighbours. An increased government push for public-private partnerships (PPPs) and promising results in the railway plan’s first phase have stirred hopes that rail transport in Ghana will return to its heyday, offering new opportunities to increase productivity and exports, and improve the country’s overall transport network.

REHABILITATION: The existing railway network is made up of three lines: Western, Eastern and Central, which are all constructed of narrow-gauge, single-track lines used for both freight and passenger traffic. Over the years this network has deteriorated, together with the rolling stock, due to poor maintenance. Railway activity peaked in the 1980s with 8m passengers and 2m tonnes of freight annually, but the rail network has since fallen into decay, with only 1.12m passengers travelling by train in 2009. As of 2008 Ghana had 947 km of rail lines, though the government plans to expand that to over 4000 km by 2047. The benefits of shipping commodities like cocoa and bauxite through rail lines, particularly given the increasing congestion and wear and tear on road links, is clear in terms of cost and efficiency. As Frank Toni Eshun, managing director of supply chain services provider Damco, told OBG, “A working railway network would greatly reduce the cost of logistics in the country. Insurance on goods would go down, security would increase, shipping times would improve, and we would be able to move larger volumes.”

MASTER PLAN: Under its expansive Ghana Railways Master Plan, the government expects to roll out a series of rehabilitations, upgrades and new construction works aimed at improving access across the country, and linking up with international rail networks in surrounding countries, including Burkina Faso, Côte d’Ivoire, Benin, Togo and Nigeria.

Work on rehabilitating Ghana’s railways began with the Tema-Accra line in 2004, a project financed by $5m from the government, a $5m loan from the Organisation of the Petroleum Exporting Countries, and $2.58m from the Heavily Indebted Poor Countries fund, and $500,000 in matching funds. The project is due to finish by late 2013, according to Abubakar Sadique, CEO of the GRDA. “The first step is to re-activate all existing lines and work to increase patronage and freight shipping across the country. After that we can look at building new track,” Sadique told OBG.

PUSHING AHEAD: Small-scale rehabilitation projects have been successful so far. Rehabilitation on 37 km of track between Accra and Tema has upgraded the line to standard-gauge specifications; work between Accra and Asoprochona was completed in 2007; and the Asoprochona-Tema Harbour line finished in 2010 and extended into Tema’s Community One in 2012.

Passenger services were reintroduced in 2007, and three out of six stations between Accra and Tema have been modernised with facilities including CCTV security cameras, car parks, new public address systems and turnstiles to improve ticketing efficiency. The government spent $23m on two new diesel passenger trains running on the Accra-Tema line, each with three passenger carriages and a 600-person capacity, which began operations in February 2013 with two daily services between Accra and Tema, according to Sadique. “These services are fairly new and people still don’t know about them, but we’re hoping patronage will increase by the time the project wraps up in late 2013. The fare is GHS1 ($0.51) and it takes 45 to 60 minutes for the trip, which is a quicker commute than you will find on the highway to Tema.”

REGIONAL LINES: The next step involves constructing a suburban line from Takoradi to Sekondi via Kojokrom in the Western Region. The project, which has been contracted to engineering firm Amandi, includes the construction and redevelopment of 30 km of railway line, nine railway stations and halts, and the supply of two diesel train sets. All future lines will be designed and constructed to run at 120 km per hour for passenger trains and 80 km per hour for freight trains, compared to the current 56 km per hour on the Accra-Tema line. Work is under way, according to Sadique, but has been hampered by construction delays that have pushed the project’s end date back to late 2014. Among the issues causing this is illegal squatting, said Sadique, whereby individuals are building temporary homes on proposed construction sites, expecting to be reimbursed by the government when their dwellings are demolished.

Further railway developments are scheduled to roll out starting in 2015 under the master plan, with expansive upgrades and new construction on the eastern, western and central/trans-ECOWAS lines expected through six phases over the next 30 years. Phase one involves rehabilitating stations along the western line (Takoradi-Awaso-Kumasi) and the eastern line (Accra-Tema-Kumasi) to create a 668-km network of rehabilitated track. According to the government’s railway master plan, the central line is not attractive for freight and passenger traffic, and will be substituted in successive phases by the planned trans-ECOWAS line connecting Ghana to neighbouring countries. Phase two will see construction of the new standard-gauge single track from Kumasi to Tamale and Paga in the north by 2015, creating 1161 km of usable track. Phase three includes the construction of connector lines for the Tamale-Yendi, Fufulsu-Sawla, Techiman-Kwadwokurom and NyinahinKumasi routes, a total of 484 km of track. Phases four through six will see expansions of the trans-ECOWAS, western and eastern lines, creating an additional 1695 km of track by 2047. The price tag for these works is understandably high. According to the master plan, “in 33 years a total of 4008 km of lines will be realised, for an investment of $21.5bn. To this should be added further investments for the rehabilitation and purchase of the freight and passenger rolling stock, evaluated respectively at $53m and $1.2bn.”

PRIVATE FUNDING: However, with government spending running high and a growing deficit causing concern about the country’s credit rating, the government is looking to public-private partnerships (PPPs) to complete its railway development. “If we are able to get these lines in place, it will help a lot with the economic development of the country. PPPs are very important. The government’s borrowing portfolio has gone so high that it can’t borrow any longer to develop the railway network,” Sadique told OBG.

A number of agreements have been signed in recent years. Part of a $3bn loan from the Chinese Development Bank was earmarked for railway expansion in 2011, with $500m reserved for upgrades on the western line. However, as of March 2013, only $200m of the loan had been received $200m, leading to ongoing delays. “It’s hard to tell when the loan will come. We are at this point encouraging other investors to come forward with proposals. We’ll wait until we are sure of issues, and for the time being we are still planning to use the loan on the western line, but we will see what happens in the future,” said Sadique.

Still, developments remain positive, with new investors coming in. For example, in May 2012 the government secured a $600m contract from US-based Conti Engineering for the rehabilitation of the western lines and repairs of Accra’s drainage systems, and a $200m accord with General Electric, the funds of which will be spent on western line rail repairs.

On the eastern line, a number of investors have expressed interest in the benefits of PPPs to build the line. In May 2012 the Ghana News Agency announced the government planned to source $990m from the Investment and Commercial Bank of China for eastern line rehabilitation, with an additional $1.95bn being sought from the Exim Bank of China for work on the Nsawam-Kumasi route.

PROMISE: The benefits of an improved rail network are enormous; by government estimates, lines in the Western Region could absorb 17% of highway traffic by 2015, and up to 40% in the Eastern Region. According to Sadique, improving and expanding lines across the country will not only improve the present export situation, but also allow for economic development in areas that are currently inaccessible. “Bauxite producers, for example, are currently finding it difficult to go by road from Obuasi. There are some bauxite deposits in the Eastern Region, and exploiting them has not been possible since the rail lines there are not working, but this will change when we have further development. It will have a huge impact,” he said.