Presentedby:EMMANUELOPOKUAG.CHIEFEXECUTIVE

GHANARAILWAYDEVELOPMENTAUTHORITY

1. INTRODUCTION

TRADITIONALMECHANISMOFFINANCINGINFRASTRUCTURE2. TRADITIONALMECHANISMOFFINANCINGINFRASTRUCTURE

3. THEPRIVATESECTORINAFRICA

4. OVERVIEWOFPUBLICPRIVATEPARTNERSHIPARRANGEMENTS

5. FINANCINGRAILWAYTRANSPORTTHROUGHCONCESSIONS

6. SUGGESTIONSOFOTHERWAYSOFFINANCINGRAIL

INFRASTRUCTURE

7. CHALLENGESOFTHEPUBLICPRIVATEPARTNERSHIPS

8. ANAFRICANINVESTMENTGUARANTEEAGENCY

9. CONCLUSION

EXISTINGRAILWAYMAP

Route Length 947kmg1067mm (3 6)

EXPANSIONOFRAILNETWORK

ProposedRailwayExpansionandModernizationestern lineastern lineans ECOWAS linema Akosombo

otal Route length - 2777kmtimated Cost - US$12.30 billiontimated Cost US$12.30 billion

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SUBURBANRAILEXPANSIONACCRA TEMA

INTRODUCTION

ilway infrastructure plays critical role in every nations developmentilway infrastructure plays critical role in every nations development.onomic returns on investments are very high.verty reduction, improves access to health, education and other facilitiesthe poor.pportant for sustainable industrial development.neral deposits like bauxite, iron ore, manganese in Ghana not beingned due to lack of railway infrastructure.ynstruction and operation of railway infrastructure have traditionally beene responsibility of Government or public.vate sector participation in the financing and operation of railwayfrastructure due to:. Lack of Government financial resources.. Decrease in Official Development Assistance from donor agencies.. Strong demand for new railway infrastructure development.habilitation of existing railway infrastructure and new ones requireassive investments.d f b h bli d i i i i h h P bli P ied for both public and private sector participation through PublicPrivate

TRADITIONALMECHANISMOFFINANCINGRAILINFRASTRUCTURE

WorldBank MainfundinginstitutionforinfrastructuredevelopmentinAfricaWorldBank MainfundinginstitutionforinfrastructuredevelopmentinAfrica.Formsoffinancinginclude:a. Loansb. Guaranteec Equityinvestmentsc. Equityinvestmentsd. PoliticalRiskInsurance

WorldBankAgenciesa. InternationalDevelopmentAssociation(IDA)

Providefinancialsupportforpublicandprivatesectorprojectstoleast ProvidefinancialsupportforpublicandprivatesectorprojectstoleastdevelopedcountriesincludingGhana. Interestrate 0.75%withMaturityperiodof35to40years.

b. InternationalBankforReconstructionandDevelopment(IBRD)Financemiddleincomedevelopingcountries.p g

c. InternationalFinanceCorporationOffersloansorholdsequityandquasiequityinvestmentsinprivateventuresonly.

d. MultilateralInvestmentGuaranteeAgency(MIGA)Providesguaranteeforforeignequityandrelateddebtinvestmentstocoverunforeseenpoliticalrisk,warandcivildisturbance,expropriationandcurrencytransferrisk.

fundinginstitutionsare:EuropeanUnionEuropeanUnion

OVERVIEWOFPUBLICPRIVATEPARTNERSHIPARRANGEMENTSARRANGEMENTS

current massive investments required for rail infrastructureelopment in Africa including Ghana cannot be fully provided bymultilateral and bilateral development partners.p p

re is the need to consider other ways of financing infrastructureelopment. Participation of the private sector is part of thetiontion.mples of PPP Financial Models:

Build, Own, Operate and Transfer (BOOT)Build, Own, Operate and Transfer (BOOT)Reverse BOOTBuild, Transfer and Operate (BTO)Build, Lease or Rent and Transfer (BLT), ( )Rehabilitate, Operate and Transfer (ROT)Rehabilitate, Lease or Rent and Transfer (RLT)Build, Rehabilitate, Operate and Transfer (BROT)Build Lease and Own (BLO)

ADVANTAGES OF PPPADVANTAGESOFPPP

Commercialviabilityofrailwayprojects.Operationalefficiency.Increasedcompetition.Improvedcostrecovery.EfficientuseofGovernmentresources.

ENABLING ENVIRONMENTENABLINGENVIRONMENT

SoundRegulatoryRegimes InGhana,GRDAg y ghasbeenestablishedunderRailwaysAct2008(Act779)toregulatethedevelopment,operationandmanagementofrailwaysystemintheandmanagementofrailwaysysteminthecountry.SoundContractDesign.SoundContractDesign.EnsuringTransparencyofprivatizationandawardprocess.Developinglocalfinancialmarkets.ReducingTransactionandbiddingcostswhichi ll hi hi Af i

NANCING RAIL TRANSPORT THROUGH CONCESSIONSNANCINGRAILTRANSPORTTHROUGHCONCESSIONSs is a common PPP model often used in theelopment of railway network especially in Africa.

mples in:ote dIvoire and Burkina Faso;

meroon;nda and Kenya;ambique;q ;awi.

a partnership between the state and a private operatora partnership between the state and a private operatorconcessionaire). Whilst ownership of rail

astructure and some railway equipments belong to thee, the concessionaire is granted the rights to operate, g g pil i d i k

ANCINGRAILTRANSPORTTHROUGH( )NCESSIONS(Contd)

cessionarrangementsarealwaysbackedbyacessionAgreementbetweentheStateandthegcessionaire.TheAgreementgenerallyincludes:

ThescopeofConcessionThescopeofConcessionRegulatoryFrameworkManagementofRailwayInfrastructureg yManagementofLocomotivesandRollingStockConcessionairesStaffC i FConcessionFeesTaxationDurationoftheConcession

SUGGESTIONSFOROTHERWAYSOFFINANCINGRAILWAYINFRASTRUCTURE

UsingPensionFundsecumulativepensionfundsofAfricaarereportedtobetween30 40billionUSDollars.InGhanaSSNITfundscan3 4usedtofundrailwayprojects.

IssuanceofInfrastructureIndexedBondsIssuanceofInfrastructureIndexedBondsisbondwillbedifferentfromaregularbondasitsvalueiskedtothemarketvalueoftheinvestmentproject.

UsingtheGlobalFinancialMarkets

S i lG C di P i ISpecialGovernmentCreditstoPrivateInvestors

GESTIONSFOROTHERWAYSOFFINANCINGRAILWAYASTRUCTURE(Contd)eisenormousreluctanceonthepartoftheprivateortobeinvolvedinthedevelopmentofrailway

astructure.

cernsare:Railinfrastructureprojectshavelonggestationperiods.Usingprojectspecifictoservicedebtwhenuserdemandwouldnotbehighenoughtoproduceadequateg g p qrevenuetopayoffloans.nvestorsrequirethatprojectsrevenuesexceeddebtservicebysomepredeterminedpercentagecalledy p p gcoverageratio.

ddresstheseconcerns,theGovernmentshouldprovideddresstheseconcerns,theGovernmentshouldprovidei f ili i i hfl ibl h i i

GGESTIONSFOROTHERWAYSOFFINANCINGRAILWAYINFRASTRUCTURE(Contd)

EstablishingRegionalInfrastructureBanks ExampleisEstablishingRegionalInfrastructureBanks.ExampleisECOWASBankforInvestmentandDevelopment.DevotingafixedpercentageofGDPtorailwayinfrastructuredevelopment.infrastructuredevelopment.IntroductionofSpecialTaxeshana,thereisaproposaltointroduceRailwayelopmentLevyforthedevelopmentofrailwayelopmentLevyforthedevelopmentofrailwayastructureinthecountry.

EstablishmentofAfricanInvestmentGuaranteeAgencyEstablishmentofAfricanInvestmentGuaranteeAgencyrovidenoncommercialinvestmentguaranteestocanandnonAfricaninvestors,privateorpublicwho

desirousofinvestinginAfricadesirousofinvestinginAfrica.

HALLENGES OF THE PUBLICPRIVATEPARTNERSHIPSHALLENGESOFTHEPUBLIC PRIVATE PARTNERSHIPS

mainchallengesarethevariousrisks:

PoliticalandLegalrisksForceMajeureTechnicalRisksrelatingtoConstructionandO tiOperationEconomicandFinancialRisksC i lRi kCommercialRisks

CONCLUSIONCONCLUSION

RailwayInfrastructureplaysaveryimportantroleinthetionaldevelopment,hencetheneedforitsfinancing.

Anumberoffinancingmechanismshavebeensuggestedatcouldbeconsideredbypolicymakersinthevelopmentofrailwayinfrastructure.p y

FactorsthatimpedeflowofcapitalfrominternationalarketsforrailwayinfrastructuredevelopmentinAfricaarey patedto:i. Policiesii Institutionsii. Institutions

CONCLUSION(Contd)Localcapitalmarketsmustbestrengthenedtosupporttherticipationoftheprivatesectorinthedevelopmentoflwayinfrastructure.

AfricanGovernmentswillcontinuetobethemajorplayersthefinancing,developmentanddeliveryofrailwayfrastructurefrastructure.

bstantial investments in developing country infrastructuree unlikely to be realized unless there is a stronge unlikely to be realized unless there is a strongstitutional framework for protecting creditors rights,ective covenants and reliable avenues of legal enforcementd remedy. International Banks and other financial entitiesspond to a strong institutional framework by lowering thespond to a strong institutional framework by lowering thest of capital.

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