Development finance institutions Deutsche Bank and Investec, in partnership with Swedish Export Credit Agency (EKN), Swedish Export Credit Corporation (SEK) and Export Credit Insurance Corporation of South Africa (ECIC), have arranged for €600-million in financing for the construction of a 100 km stretch of Ghana’s Western Railway Line, from the Takoradi port to Huni Valley.
“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 corridor is home to key bauxite mines, which are the bedrock of the country’s integrated bauxite aluminium masterplan.
"The completion of the line will boost economic activities along the corridor and will reduce the cost and time of transporting goods and passengers between the two ends,” says Ghana Finance Minister Ken Ofori-Atta.
The project is part Ghana’s initiative to expand and develop its rail network infrastructure, updating the route to make it safer and faster, while providing an alternative to less environment-friendly modes of transport, such as haulage trucks and private cars.
The €600-million in financing consists of two loans extended to Ghana’s Ministry of Finance. Deutsche Bank acted as mandated lead arranger for both loans.
The engineering, procurement and construction (EPC) contract of the project will be carried out by Amandi Investment, with Bluebird Finance & Projects acting as lead financial adviser for the EPC.
“This project is part of Ghana’s railway infrastructure plan and has been earmarked for implementation by government and will be the single biggest railway investment by the country, post-independence,” says Ofori-Atta.
The first loan, backed by EKN and arranged by Deutsche Bank, is a €523-million loan covering the bulk of the cost. The second loan is a €75-million commercial loan arranged and structured by Investec to cover the down payment on the EKN-backed financing. It is backed by the ECIC and funded by a syndicate comprising Investec Bank, Rand Merchant 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,” Deutsche Bank structured trade and export finance global head Werner Schmidt comments.
“This transaction will finance part of the Western Railway Line, which will help strengthen Ghana’s economic growth by increasing both freight and passenger connectivity between the different regions in the country but also serve in the transportation of different mineral deposits.
"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. The loan is structured with a strong focus on international environmental and social standards,” he adds.
The involvement of EKN and SEK reflects the significant number of Swedish sub-suppliers participating in the project, with the export credit agencies’ backing helping to secure a highly favourable borrowing rate.
This transaction is one of several recent major infrastructure financing transactions for Investec in Ghana involving the support of Africa-based EPC contractors with export credit supply chain financing solutions. Two further projects are currently in financial close in the health and transportation sectors.