Parliament approves US$48m tax waiver for railway line construction

Parliament has approved a tax exemption amounting to US$48m for the procurement of equipment and materials for the design and construction of an 84.8km multi-modal railway line including railway stations between Tema and Akosombo and the design and construction of railway heads at Tema and Akosombo.

According to the report of the Finance Committee, the US$48m tax waiver consist  of import duties, import VAT, ECOWAS levy, EXIM levy, Special Import levy and other approved imports of equipment and materials to be procured by MoRD/AFCONS Infrastructure Limited of India in respect of a design and construction of the 84.8km multi-modal railway line.

Presenting the report on the floor of Parliament, Chairman Of The Finance Committee, Dr. Mark Assibey-Yeboah, revealed that the objective of the project is to address the imbalance between transport modes for long distance transit and domestic freight movements from Accra/Tema northwards and vice versa.

He also stated that: “In particular the movement of containerized and other bulk commodities via rail as an alternative to current transport solutions will improve existing port operations, resulting in reduced vessel waiting time and reduced cost of shipment in terms of time and money.”

The report also noted that the contract agreement between government and the AFCONS Infrastructure Limited, India for an amount of US$398m has already been approved by the legislature as far back in 2016.

Furthermore, the report indicated that the project scope comprises: detailed design and construction of an 84.4km single standard gauge railway line from Tema to Akosombo consisting of formation in cutting and embankment culverts and bridges for drainage, ballast beds, track (PSC Sleepers and rails) grade separation and viaducts, passenger station buildings and ancillary facilities, signaling and communication system for the entire stretch from Tema to Akosombo.

Others include: railhead with basic facilities at Tema and Akosombo, railway maintenance facilities near Tema including workshops for locos, tracks and wagons, and capacity building, training of personnel in all aspects of operations and maintenance of the railway system.

Additionally, the report states that the EPC Contractor is required, under the existing agreement, to cater for the following: land acquisition and compensation payments to land owners, major underground utility relocations, extension of the railway line by a further 10km from the original termination location of Akosombo to Mpakadan, development of three inland container depots (ICDs) at Afienya, Doryumu and Adomi Village.

Members of the Finance Committee recommended to the Ministry of Finance and the Ghana Revenue Authority(GRA) at the committee level, to come up with a detailed scientific cost-benefit analysis of the waiver system as currently practiced with a view to coming up with a policy that will ensure optimum benefit to the economy.

The Committee was informed that no material or equipment has been cleared by the contractor for the project on temporary permits. The contractor was said to have shipped goods which are currently held at the Tema Port.

However, the Ministry of Finance has taken a cue from previous admonitions of the Finance Committee and refrained from issuing temporary permits for the Contractor to clear the goods until Parliament grants the necessary waivers.