Ghana taps Transnet for rail renaissance plan
It’s all happening in Ghana’s Western Region. Multinationals are setting up shop in the picturesque seaside town of Takoradi, lured by rich oil and gas deposits
In addition to oil and gas, Ghana’s Takoradi is home to several major mining operations. Looked at from an industrial and infrastructure development perspective, the Western Region is abuzz and booming, according to Wilson Mogoba, a programme director at South African logistics company Transnet.
Mogoba is driving Transnet’s joint initiative with Ghana Railway to breath new life into a 66km stretch of railway line in the Western region between Takoradi and Tarkwa.
In mid-2019, the Ghanaian cabinet gave the go-ahead for the development of a petroleum hub in the Western Region.
This lines up with Ghana’s six-phase Railway Master Plan designed to revitalise the country’s existing railway network of under 1,000km and expanding it to more than 4,000km by 2048. Initial estimates place the investment value of Ghana’s rail revival scheme at $21bn.
Enter Transnet, the South African government-owned diversified logistics company. Transnet has freight rail, ports, port terminals, pipelines and engineering operating divisions. It is the continent’s biggest rail and port operator.
In a bid to diversify its revenue base, Transnet conducted a global scan on areas of potential interest about four years ago. “We would achieve that, in part, by expanding our geographic footprint. Ghana came up in the top 18 countries. Since then, we have been looking at Ghana in earnest,” says Mogoba.
“More than 60 years ago, [Ghana] had a railway network of close to 1,000km. Today, we step into an area where only 66km of that network exists. The attendant industries that would typically have existed to support the railway have all but disappeared in Ghana,” Mogoba adds. “[The Western line] holds tremendous potential for the transportation of freight, mostly serving the mining [and] agricultural sector[s]. It has a link all the way to Kumasi,” he says.
The line between Takoradi and Tarkwa is not long, but it serves a manganese mine.
In 2019, the mine exported about 5m tonnes of manganese ore through Takoradi. The railway only moved around 560,000tn. This is “a serious indictment on the state of [Ghana’s] rail infrastructure,” according to Mogoba. “Now, road transportation is not cheap. It’s not friendly to the roads. It causes traffic congestion and a whole host of [other] challenges,” explains Mogoba.
Crucially, Ghana Railway, the operating entity, is not doing well. “Through us injecting our technical and operational expertise, we see a transformation in [Ghana] Railway. That [could] lead to a company that becomes a net positive contributor to Ghana’s economy.”
A small piece with bigger prospects
Transnet has bigger ambitions. “The agreement puts us in a position to start reviving the Western line. We are looking at [it] in the context of an even bigger execution of the Railway Master Plan – that is why it is exciting for us. The agreement is a small piece of the Western line. The bigger prospects are the entire Western line and broader railway development in the country,” says Mogoba.
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The deal is the culmination of years of discussions between Transnet and Ghana Railway.
The Ghanaians are keen to tap into Transnet’s operational expertise, he says. “They operate a railway that only runs about 500,000tn per annum. We [operate] a railway that runs well over 220m tonnes per annum. We are coming on board to up their game significantly,” says Mogoba. “Bauxite is [transported] entirely on the road. Cocoa, all of it is [transported] on the road. Take all this bulk cargo, put it on rail, and [suddenly] you begin to have a logistics value chain that works.
“The ticket size [of the joint Western Region project] might be deceptive once we’ve done the numbers. But the systemic impact on Ghana’s economy is significant,” according to Mogoba. Transnet and Ghana Railway are now finalising due diligence. Once completed, work will begin on the line to rehabilitate it and make it safe.
The urgency of the task at hand is highlighted by the fact that the line is in dire straits.
Derailments are a common occurrence – so are slow speeds. “We are going to send in our technical teams to work with the Ghanaian workforce as partners. We are going to do some work with our construction guys to fix the line and to maintain it,” says Mogoba. The work will start around March 2020 and will take between six and nine months.
An important aspect of the deal is that it has support from President Nana Akufo-Addo, minister of railways development Joe Ghartey and the railway administration. “Hopefully, all those elements will come together to make the journey of change that much more palatable,” Mogoba enthuses.