International financing has driven much of the expansion of Gabon’s transport network, either through foreign direct investment (FDI) or loans, grants and other forms of assistance. While the government is committed to investing in infrastructure upgrades, officials also recognise the critical role foreign companies and financial institutions must play in creating the efficient, interconnected transport network necessary to reach Gabon’s economic development goals. To do so, the government is actively seeking international partners in a variety of capacities to benefit from firms’ technical expertise, project management structure and financing flows.
In Gabon, as in much of the continent, a number of key transport links have been completed with investment from foreign companies working to optimise their operations in-country. Extraction and industrial companies have traced the African continent with roads and railways both to facilitate their operations and to benefit the host state. This continues to be an important driver of infrastructure projects today.
OIL & GAS INVESTMENT: In particular, oil and gas exploration have driven the development of a number of projects. Total Gabon, a French oil operator present since the 1950s, signed a financing agreement with the government to provide CFA20bn (€30m) for the reconstruction of the Port-Gentil airport. Work began in 2011 to bring the airport up to international standards by lengthening the runway from 1900 metres to 2600 metres, which will allow the airport to accommodate Boeing 737-800 aircraft. The runway is expected to be complete by the third quarter of 2012, after which Port-Gentil will be able to receive direct flights from Europe.
The second phase of the renovation effort includes the construction of a 5800-sq-metre international passenger terminal and a 1200-sq-metre presidential pavilion, expected in 2015. Port-Gentil is the centre of Gabon’s hydrocarbons industry, but companies’ personnel and equipment are currently transported by boat from Libreville. The possibility of direct travel to Port-Gentil should, therefore, significantly reduce transport costs and delays for operators.
Total’s contribution to the project was disbursed from the Provision pour Investissements Diversifiés (PID), a public economic development fund. Under Law No. 14/74, enacted in 1975, oil companies have the option to pay part of their required income taxes into a fund for future investments such as the PID or the Provision pour Invetissements dans les Hydrocarbures (PIH), a similar fund used to finance investments specifically related to the development of Gabon’s oil and gas industry. As such, this system allows the government to more effectively channel private sector funds into national development projects.
In September 2012, Royal Dutch Shell signed a financing agreement with the Gabonese government and the German Agency for International Cooperation to strengthen road infrastructure around Shell’s oilfields in the south-west. Under the agreement, Shell will finance the construction of a 53-km road between the towns of Moungagara in the Ndougou department to Loubomo in the Basse Banio department. This road segment will ultimately connect the city of Gamba, where Shell has been active in oil exploration and extraction since the 1960s, to the national road network through Route National 6. Project financing will be drawn from both the PID and PIH. Construction is slated to begin in October and will take a minimum of two years to complete.
NON-PETROLEUM PROJECTS: A number of projects have also been spurred by the non-hydrocarbons economy as the transport sector is increasingly privatised. In particular, growing investment in the mining industry in the next two to four years is expected to impact the transport sector. Discussions are ongoing to award the operating licence for the Belinga iron ore deposit in the north-eastern Ogooué-Ivindo province – a project that will entail significant external investment in transport infrastructure. Belinga is estimated to contain up to 1.4bn tonnes of iron ore, which would make it one of the world’s largest untapped iron deposits. The target for preliminary production at Belinga is 20m tonnes of ore per year, which will then need to be transported to processing and export centres on the coast. Officials estimate that annual production may exceed 50m tonnes once the mine enters full operation. However, insufficient road and rail transport links to Belinga must be addressed before the mine can be fully developed.
Ultimately, the project will require the construction of a 560-km railway to link Belinga with the Trans-gabonais railroad at Booué and a deepwater mineral port, as Owendo’s port does not have the capacity to process Belinga’s projected output levels. Several sites are reportedly under discussion for the new mineral port in the area north of Libreville.
INTERNATIONAL PARTNERS: In 2007 the government signed a convention with China Machinery and Equipment (CMEC), awarding CMEC subsidiary the Belinga Mining Company the mining concession. Under the convention, CMEC would have been responsible for financing the railroad and port construction, part of a total projected investment of CFA1.6trn (€2.4bn). However, after years of inactivity, the government suspended its agreement with CMEC in December 2011 and is currently reviewing other partnership possibilities. A government official told Reuters in February that the ministry is in discussion with Australian mining company BHP Billiton, but this has not been officially confirmed by either party. The ministry has stated that a new operating licence will be awarded no earlier than 2014.
DEVELOPMENT ASSISTANCE: International assistance has been critical to the completion of numerous projects, often in the form of loans and grants meant to foster economic and human development. While much progress has been made in the last decade, Gabon’s transport infrastructure is still in need of upgrades, and international financiers will continue to play a critical role. For example, Gabon’s nationwide road programme, the Programme Routier, was launched in 2009 with the African Development Bank (AfDB) providing 90% of financing, or CFA165.08bn (€247.62m). Work on the first phase of the project is expected to wrap up in October 2012 and will have developed 236 km of priority highways, effectively covering 24% of the national territory.
In September 2011 the AfDB approved CFA167bn (€250.5m) in financing for the second phase of the programme, which will continue work on the main north-south highway and improve road connections to the economic capital of Port-Gentil. Ultimately, the programme will create a direct line from the Cameroonian border in the north near Bitam to Doussala on the Congolese border. Once complete, the new roads are expected to decrease vehicle operation costs by 38% and reduce the 13-hour journey from Libreville to Tchibanga to eight hours, a key step toward opening up the agricultural, mining and tourism potential of Gabon’s south-western provinces.
The French Development Agency is currently financing a CFA44.1bn (€66.15m) project to refurbish and widen a 47-km stretch of Route Nationale 2 between Medoumane and Ndjolé. Improvements along this route will contribute to reducing travel times between Libreville and the north of the country, and speeding up the transport of minerals from manganese mining operations around Ndjolé. In addition, the Inter-American Development Bank is also financing the construction and redevelopment of a 51-km road between the towns of Ovan and Koumameyong, the first phase of a project to create an efficient link to the Belinga deposit in the north-east. The Ovan-Koumameyong segment is slated for completion in 2013.
IMPROVING AVIATION: A project is also in place to upgrade the infrastructure at eight of Gabon’s provincial airports, with funding from several international institutions, including the Islamic Development Bank, the Arab Bank for Economic Development in Africa and the Development Bank of Central African States. Improving air connections with provincial capitals should help considerably to open up more isolated rural areas and capitalise on the economic potential of all regions. Projects to elongate the runway and upgrade passenger terminals in Franceville, Koulamoutou and Lambaréné are already under way, and similar work is planned in Makokou, Mouila, Oyem and Tchibanga.
Ultimately, the government hopes to facilitate $13.5bn in transport projects between 2012 and 2016 under the National Infrastructure Master Plan, including $6bn investment in roads, $5.5bn in railways and an additional $2bn for general transport projects. While the National Agency for Public Works has not specified how much of this investment will come from public and private funds, foreign companies and financial institutions will be critical in realising these plans. The state has also indicated it will encourage a variety of partnership and financing structures, including FDI, private investment, public-private partnerships and concessions in order to engage global partners at all levels of the process.
Read More from OBG
