Parliament has approved a $243.6 million facility to procure a total of 35 standard gauge rolling stock as part of government's efforts to revamp the railway sector.

The supplier’s credit agreement is between government represented by the Finance Ministry and Messrs Dongfang Electric International Corporation.

The purpose of the instant credit agreement is to finance the acquisition of standard gauge rolling stock to enable testing, commissioning, and immediate operation of the new standard gauge railway lines currently under construction in the country.

The scope of work between the partners is to supply nine Nos. 4500HP Mainline Diesel Locomotive with a maximum speed of 160km/h for passengers, the supply of 48 Nos. Passengers coaches, 15 Nos. 4500HP Mainline diesel locomotives for freight with a maximum speed of 100km/h.

The rest also includes the supply of 330 Nos. Freight Wagons and supply of 11 Nos. 1000HP Shunting Diesel Locomotives.

A total of 35 standard gauge trains are therefore to be delivered by the suppliers as part of the contract.

The contract will be implemented in two phases. The first phase will be completed in two batches within 12 months and 18 months respectively from the date of contract commencement.

Per the agreement, Messrs. Dongfang Electric International Corporation will be procuring the 100% financial solution to execute the contract from the Industrial and Commercial Bank of China (ICBC) Limited or China Construction Bank.

The terms and conditions of the agreement is two years grace period and 10 years of repayment period. The interest rate of the facility is 6M Libor +2.5% p.a. with 12 years tenor.

Presenting the Finance Committee’s report for approval of the agreement, Chairman of the Committee, Dr. Mark Assibey Yeboah observed that as part of the agreement, the company will also provide spare parts and tools along with a 24 months warranty period.

He added that the contract will see the establishment of one Maintenance Workshop (not more than 3000m2) with equipment at a location yet to be determined by the purchaser.

Dr Assibey added that the supplier will also provide training for skilled personnel or railway engineers and managers in all aspects of the rolling stock systems including Locomotive design, operation, and maintenance to ensure adequate transfer of technology from the suppliers to the local staff.

On the socio-economic impact, the Chairman said, the operations of the trains will facilitate the movement of people and goods and create both direct and indirect employment opportunities and generate income within the catchment communities.

The committee also observed that the construction of the 97km railway line from Port of Tema to Mpakadan is expected to be completed ahead of the contractual completion date of July 2021 and some of the rolling stock being financed under the instant Supplier’s Credit Agreement will be used to test, commission and operationalise the Tema-Mpakadan rail line.

Debating the facility for approval from the House, the minority Spokesperson on Roads and Transport, Governs Kwame Agbodza demanded a Value for Money (VfM) assessment on the agreement in accordance with the laws of Ghana.

He, however, added that smooth implementation of the facility will boost the railway sector of the economy.