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General News Mon, 19 Jun 2006

Ghana Railways in financial turmoil

...?5.7bn workers' salaries still in arrears
...Alcan International blamed for poor tariffs

Ghana Railways Company (GRC), which was set up by the British colonial rulers to haul the country?s natural resources like timber, gold, manganese and bauxite from inland to the Takoradi seaport for export, is in serious financial crisis.


Information obtained from sections of the workers indicate that the May salaries of the almost 4000 strong workforce were still in arrears and had not been paid as at now. GRC has a monthly wage bill of ?5.7 billion.


Independent investigations conducted by The Chronicle, coupled with interviews granted this Reporter by some of the workers, revealed that the financial woes of the once vibrant company could partly be attributed to Ghana Bauxite Company (GBC), which is owned by Alcan International based in Canada.


GBC is reported to have defied all promptings to increase the tariff paid to the GRC for hauling the bauxite ore from Awaso to Takoradi for export.


The Chronicle gathered that when GBC took over the Awaso mine, the then PNDC government was subsidizing the hauling of the mineral from Awaso to Takoradi.

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The government however withdrew this facility in 1987 with instructions to the GRC management to do full cost recovery in the hauling of the mineral.


Three years later in 1990, management of both companies met and agreed on $9.35 as the cost for the hauling of one tonne of the mineral.


Though the figure was nowhere near the full cost recovery, GRC has to make do with it.


Sixteen years after this price had been fixed, GBC has refused to increase the tariff to reflect the present economic situation in the country. This refusal by GBC, coupled with the present high cost of fuel and other inputs, has really thrown the GRC into a serious financial crisis.


Currently the haulage of both bauxite and manganese is the only source of income for the GRC as the passenger traffic has completely broken down.

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Despite this refusal by the GBC to increase the tariff for the GRC, it has gone ahead to contract some tipper trucks that are hauling the mineral from Awaso to Takoradi at the cost of $13.5 per tonne.


Though using such a heavy-duty vehicles to haul the mineral could cause considerable damage to the asphalted roads, GBC prefers using that to rail transport.


Some of the GRC workers who are facing the brunt of the GBC action told this Reporter that in Guinea where Alcan International is also operating, it is paying the rail company over there $6 per tonne for the haulage of the mineral over a distance of 100km.


But here in Ghana, the company has refused to pay realistic bill to GRC even though in terms of mileage, Ghana is ahead of Guinea taking into account that from Awaso to Takoradi is a distance of 240km.


A section of the GRC workers further told The Chronicle that they had information that a tonne of bauxite at the world market is $25 but GBC or Alcan International was simply refusing to pay them the due share of the world price.

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?At the time the $9.35 per tonne price was fixed, a litter of diesel was 20 cents, but today a litter of diesel is hovering around 80 cents yet GBC would not increase the price?, a worker told this paper.


The GRC workers also noted that if the government did not get itself involved in the impasse, a time would come when their management would not be in the position to pay the workers at all. This, they noted, could bring serious economic crisis in the country looking at the total workforce of the GRC.


When GRC was contacted, a management source admitted that tariff being paid to them was woefully inadequate to meet the high cost of hauling the mineral from Awaso to Takoradi but noted that negotiations were still going on between them and the GBC to resolve the impasse.


The Chronicle gathered from independent sources that currently, it was the GMC that was sustaining the GRC in terms of revenue.


The passenger service, which is the major source of revenue for railway companies in Europe, is non-existent now. Almost all the routes have been closed down due to poor revenue generation.

The company itself was put on divestiture by the government but the idea was later shelved. The collapse of the GRC could mean the ultimate collapse of the twin city of Sekondi-Takoradi since it is one of the few companies that are sustaining the local economy.


Meanwhile, The Chronicle is investigating those who are behind the tipper trucks hauling the mineral from Awaso to Takoradi agreement and causing damage to the roads built at high cost to the taxpayer.

Source: Chronicle
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