Dubai: A consortium headed by Dubai-based Kampac Oil Company has signed a $1.6 billion (Dh5.8 billion) contract for a railway project in western Ghana.

Kampac yesterday announced the signing of a 35-year concession with the Ghana Railway Corporation.

The contract involves the construction of 800 km of new railway line and the rehabilitation of 400 km of existing line.

The construction of the new line between Takoradi and Hamile in the Upper West Region will begin in December.

The first phase of the contract - redevelopment of the present 400 km rail line - is scheduled to complete in 18 months, and the entire 800 km new line will be commissioned in 48 months.

Ghanaian Minister of Ports, Railways and Harbour Christopher Ameyaw Akumfi said this contract heralds a new era in cross-border investment and economic cooperation between the UAE and Ghana.

"The awarding of this contract marks the fulfilment of the government's policy to extend the country's rail network to the northern parts of the country," he said.

"It will also promote cross-border trade and economic activity through improved land transport linkages and improve air passenger and freight linkages across Africa's sub-region," the minister added.

Reducing congestion

Under the terms of the contract, Kampac Oil ME will design, build, operate and transfer the 800 km rail line from Takoradi to Hamile to the government.

Kampac has secured the mineral and mining rights for key proven reserves valued at more than $2 billion as part of the concession.

The new standard gauge line will start from Takoradi and run via Manso, Tarkwa, Huni Valley, Dunkwa, Awaso, Nyinahim, Sunyani, Techiman, Bole, and Sawla, Wa to Hamile.

The UAE organisations in the consortium are the Jebel Ali-based Gulf African Project Co Ltd and Dubai's Suresh Trading Co.

Other consortium partners are China National Machinery Import and Export Corporation, Trans-tech Engineering Corporation, Manferrotaal, Rail One of Germany, Pasiner Edustrial Tesisler Sanayi Ve Ticaret A.S. of Turkey, R.H. Railway Consultants, Consolidated Power Projects (Ptg), Geneva-based Optima Asset Management Co., and Smice International.

The project seeks to strengthen Ghana's freight corridor while stemming the railway network's traffic problems and revenue losses.

The project also envisages rehabilitating and maintaining the existing Western Line.

Part of the project is the opening of an inland port at Boankra Kumasi aimed at reducing customs clearance pressure at the Tema and Takoradi ports by redirecting freight inland, thus increasing rail traffic and revenue.

The financing of the project was done through the assignment of $2 billion worth of mineral and mining rights to the consortium on an exclusive basis.

Kampac plans to raise $2 billion to $4 billion by monetising a portion of the mineral property assets.