Gabon’s only railway line has secured EUR 312 million in financing for its next renovation stage, recognized as one of the largest railway infrastructure financings in Central Africa. The International Finance Corporation (IFC), Proparco, and the Société d’Exploitation du Transgabonais (SETRAG) have entered into a financing agreement to modernize the Trans-Gabon Railway, a key economic lifeline contributing around 20% to Gabon’s gross domestic product (GDP).
The agreement marks a significant milestone in the continued modernization of the Trans-Gabon Railway, which has now reached phase three of its reconstruction. This latest funding includes EUR 225 million in new financing and the refinancing of EUR 87 million from previous phases.
Financing Breakdown
The deal includes EUR 192 million from the IFC and up to EUR 120 million from French development finance institution Proparco, a subsidiary of the Agence Française de Développement (AFD). The financing was supported by Eramet, Comilog, Meridiam, and the Gabonese state, who are shareholders in the concessionaire and operator of Gabon’s railway line, SETRAG.
An Orrick, Herrington & Sutcliffe team advised on the project aspects for the sponsors SETRAG, Eramet, Comilog, and Meridiam. The team was led by Paris-based partners Yves Lepage and Hugues Martin-Sisteron, and included Paris partner Christophe Lefort and Paris senior associate Adil Kourtih.
Trans-Gabon Railway Overview
The Trans-Gabon Railway is 648 kilometers long and links Owendo on the Atlantic coast to Franceville in eastern Gabon. It is regarded as the backbone of Gabon’s rail transport system, playing a key role in transporting minerals, goods, and passengers, as well as in the development of national and regional logistics chains.
The railway network is particularly important for the transport of manganese, of which Gabon is one of the world’s top producers. The renewal program is focused on upgrading the railway’s infrastructure and systems, while supporting the diversification of rail services beyond the mining sector.
Supporting Economic Development
IFC regional vice-president for Africa Ethiopis Tafara commented that reliable transport infrastructure is essential to private sector development, regional competitiveness, and job creation. Through this partnership with Proparco and SETRAG, the IFC is supporting the modernization of a strategic railway infrastructure that will strengthen supply chains and improve connectivity for communities and businesses.
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Christian Magni, CEO of SETRAG, said the successful completion of the financing marks a decisive milestone for both SETRAG and Gabon, allowing them to accelerate safety upgrades and full modernization of the Trans-Gabon Railway. Françoise Lombard, CEO of Proparco, remarked that the financing demonstrates the AFD Group’s ability to mobilize joint financing in support of sustainable infrastructure projects.
In April, global commodities company Trafigura signed a USD 1 billion prepayment agreement with Gabon in a significant crude oil deal, highlighting the country’s ongoing efforts to develop its economy and infrastructure.
The modernization of the Trans-Gabon Railway is expected to have a significant impact on the country’s economy, with the potential to increase trade and commerce. The railway’s importance to the transport of minerals, such as manganese, cannot be overstated.
As the project moves forward, it is likely that the IFC, Proparco, and SETRAG will continue to work together to ensure the successful completion of the modernization. The partnership between these organizations has been instrumental in securing the necessary financing for the project.
The Trans-Gabon Railway’s modernization is a complex process that requires careful planning and execution. The project’s success will depend on the ability of the parties involved to work together effectively and overcome any challenges that may arise.
One of the key challenges facing the project is the need to balance the modernization of the railway with the need to support local economic development. The project’s focus on diversifying rail services and supporting local communities is a step in the right direction.
The modernization of the Trans-Gabon Railway is a significant undertaking that has the potential to have a major impact on Gabon’s economy. The project’s success will depend on the ability of the parties involved to work together effectively and overcome any challenges that may arise.