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14.09.2004 Business & Finance

Scandal Over Railways Divestiture

By Alfred Ogbamey for Gye Nyame Concord
Scandal Over Railways Divestiture
SEP 14, 2004 BUSINESS & FINANCE

Key industry parcelled out to flagging South African giant with a history of inefficiency GHANA RAILWAYS COMPANY (GRC) is scheduled for takeover by an equally inefficient monopoly with a reputation for late trains, unreliability, over-staffing, unscheduled departures and arrivals, among others.

The company, South Africa's rail monopoly, Spoornet's calamities are a dime a dozen: late trains, angry customers, sky high tariffs, and so on.

Yet it has been handed the bid for its equally inefficient Ghana Railways counterpart, raising concerns within informed circles that the takeover provides another opportunity for the struggling South African giant to offload its over-aged South African fleet of coaches to another sister African nation, as well as provide room for changes to meet demands for reforms at its Umjantshi House, Braamfontein headquarters.

Deep throat sources at the Castle, Osu, say Spoornet won the bid largely as a result of intense lobbying by Mr. Moeletsi Mbeki, South African President Thabo Mbeki's brother and head of KMM Investments, a company associated with the bidding consortium, and also because of its over-hyped, unrealistic bid.

Though efforts to speak to Ports, Harbours and Railways Minister Professor Christopher Ameyaw-Akumfi proved futile by press time, with his public relations office unwilling to speak on the issue throughout Friday, recent reports suggest that the loss-making but potentially viable GRC has been parcelled out to Spoornet.

Incidentally, the state-owned South African Spoornet has been struggling for years and has seen decline in service levels, compelling South Africans to call for its privatisation.

Ms. Dolly Mokgatle, the CEO who was hired late last year to shore up Spoornet's image and get it back on track after her successful stint in a high flier position at an influential South African firm, recently confessed that one needed to have “the customary thick skin, endless patience, willingness to make unpopular decisions, and people skills” to revive the struggling giant.

The company has been described in various South African newspapers as an overfed, inefficient monopoly with a cumbersome bureaucracy.

The Financial Mail recently reported that corporate South Africa - especially the mining and export sectors - was struggling with Spoornet's “poor service, lax management and soaring tariffs”, with some calling for private sector participation in the monopoly.

The inefficiencies of Spoornet in SA have already seen the company, which has a subsidiary road transport business, shifting traffic load to the road transport sector.

As recent as August 2003, Spoornet went cup in hands to the Mbeki-administration to beg for almost 3 billion Rand (R) as capital to buoy it up.

Just like Ghana Railways, Spoornet is undergoing stringent cuts and measures to improve service, with a planned R42.5-billion budgeted by the State for it over a 10-year period to purchase and improve its locomotive and wagon coaches.

Curiously, the bid for Ghana Railways was opened in Accra months after Mbeki's brother had announced to the media in South Africa that GRC had been given to them.

Media reports at the time also indicated that Senior Minister J.H. Mensah had led a team that signed a Memorandum of Understanding (MOU) parcelling Ghana Railways to the SA company.

Reacting to a recent question posed by this reporter on a Wednesday edition of Peace FM's Kwame Sefa Kayi's “Kokrooko” programme, on how the bid could be opened after the announcement of a handover to Spoornet, Prof Ameyaw-Akumfi explained that the initial decision to hand over GRC to Spoornet was changed for a competitive bidding.

Interestingly, Spoornet was sure it would grab the ticket for the re-opened bid long before the results were announced and had indicated that it would require about US$94m in capital to bring GRC on line.

Only two companies were short-listed to enter into the final round of bidding for the rehabilitation and management of GRC after three companies, Railnet and United Rail, both from the United Kingdom, and Spoornet put in their bids on March 31, this year. Ghana's railway network has over the years not seen any major investment, which has almost grounded rail services in the country.

Gye Nyame Concord was unable to get officials of the Divestiture Implementation Committee (DIC) to comment on this issue by press time. Keep reading.

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