Ghana Railway Company has signed a pre-mandate agreement with the African Export-Import Bank (Afreximbank) aimed at raising US$2.1 billion in funding to support the development of its 299km standard gauge railway network.
The railway network will connect Ghana’s western corridor to the Port of Takoradi and provide an essential link to external markets.
The two parties have signed a project preparation facility Heads of Terms (HoT) agreement and a pre-mandate letter.
Under the HoT agreement, Afreximbank will provide funding to finance the preparation of feasibility studies.
The pre-mandate letter appoints Afreximbank to perform certain tasks including syndication and advisory services in advance of the project attaining bankability, aimed at raising the debt facility amount, currently estimated at US$ 2.1 billion.
Afreximbank said the railway would create new pathways for value-added goods to be transported from manufacturing and processing areas to regional and global markets, noting that Ghana’s new mining projects in particular would benefit from the investment.
“The Western Railway Corridor project is a vital transport network for Ghana, and Afreximbank’s support is in line with our commitment to help member countries address key trade-enabling infrastructure bottlenecks through private sector-led investments that will unlock significant pent-up demand for Ghanaian mineral and agricultural commodities in regional and international markets,” Benedict Oramah, president and chairman, Afreximbank stated.
“[I] am particularly thrilled that in this project, Afreximbank and its partners are pioneering our innovative non-recourse project finance solution premised on freight volumes and not member countries debt-carrying capacity.”
The project is expected to reduce transport costs by 30%, increase the safety and reliability of transportation, and stimulate trade and economic growth in Ghana. About 5,000 direct jobs are expected to be created during the implementation phase, with another 50,000 indirect opportunities created along the railway corridor.
According to Afreximbank, the railway line will facilitate the export of minerals and commodities resulting in at least US$ 950 million of trade each year.