R2bn Gautrain investment delayed due to Covid-19

The planned R2 billion investment to ease Gautrain capacity constraints, which includes the acquisition of second-hand rolling stock from the United Kingdom, has been delayed because of restrictions on the movement of people and goods during the global Covid-19 pandemic.

Gautrain Management Agency (GMA) CEO William Dachs confirmed that the procurement process for the additional rolling stock has not yet been concluded.

“We anticipate that the procurement of rolling stock will be complete in October 2020, but note the risk that Covid-19 may impact on this target date,” he said.

Dachs said the GMA is looking for between 25 and 28 coaches and, depending on the number of coaches per train, this is between five and seven train sets.

He said the cost of acquiring the additional rolling stock will be determined by the procurement process, but stressed the R2 billion cost estimate is for the total project, including the refurbishment of the trains and investments in the infrastructure on the system to cater for these trains.

“It is not the cost estimates for the trains themselves.”

Former GMA CEO Jack van der Merwe said at the Southern African Transport Conference in July 2019 that the new coaches would most probably arrive in South Africa within the next 18 months. Thus the target date for the coaches’ arrival was December 2020.

However, Dachs said the December 2020 timeline may slip by a few months given restrictions on the movement of people and goods during the global pandemic.

He added that the Development Bank of Southern Africa is still one of the potential funders of this investment programme.

He confirmed the plan is still to run the new additional rolling stock from the airport on the east-west line, with all the existing trains then running on the north-south line.

“It will allow for a separation of different train set types for the two different services. This in turn allows for simpler operations,” he said.

M&R weighs in

The Bombela Concession Company (BCC) – the special purpose vehicle established for the design, partial financing, delivery, operation and maintenance of the Gautrain – holds the 15-year concession for operating and maintaining the Gautrain.

JSE-listed engineering and construction group Murray & Roberts (M&R) owns a 50% shareholding in the BCC.

M&R CEO Henry Laas said earlier this year the group’s investment in the BBC continues to do well and the group would like to extend the concession.

Laas added that the concession company is leading the procurement process for the additional train sets, and that Van der Merwe and Dachs plus some concession company people visited a few potential suppliers in late 2019.

He said some modification will be required to the trains to make them compatible with South Africa’s system and conditions.

“Then we need to renew and extend the concession,” he said.

Laas said some people are unhappy about the government guarantee to the concession company and that competition concerns have also been raised about the Gautrain and other transport systems. However, he stressed that nowhere in the world would you find a rapid rail system like the Gautrain that is financially self-sustainable, adding that all of them are government subsidised.

Laas said the concession company raised all the funds for the Gautrain and the banks were only prepared to extend the borrowings to the BCC provided there was certainty they would get their money back.

“For that to work, the system has to generate a minimum level of revenue that will enable us, the concessionaires, to meet our cost obligations and to repay the debt.

“If the system ridership does not generate that minimum level of revenue, it can’t work. The government must subsidise it to that minimum level of revenue and that is how it works currently.

“Every month we see what the income is from the ridership. If there is a gap between the minimum required revenue and that income, that gap is bridged by a contribution by the province. That is the only way a train like this can work,” he said.

Misguided notions

The Competition Commission, when it released its findings and recommendations to its public transport market inquiry in February this year, said the Gautrain was a big policy mistake and there is no justification in a country like South Africa for the government to subsidise the middle class.

However, Dachs said the GMA engaged the commission directly after the release of the report and made the point that Gautrain is much more than moving people out of cars and the notion of Gautrain as a ‘middle class subsidy’ project is misguided.

Dachs said the commission and Gauteng roads and transport MEC Jacob Mamabolo issued a joint statement after the meeting, noting that Gauteng is arguably the most advanced province in the country in regard to many of the commission’s recommendations, particularly in terms of attempts at devolution, integration and establishment of a provincial authority.

“The commission also noted the impact the Gautrain has had on the space economy of the province and the efforts it has made in integrating with other modes of transport, especially the minibus taxi industry,” he said.

Gautrain spokesperson Kesagee Nayager said on Friday the annual Gautrain fare increase has been delayed until further notice and parking fees suspended for all rail users because of financial and other stresses that many of the Gautrain passengers and South Africans at large are facing due to the outbreak of Covid-19.

The Gautrain’s operating hours were also extended from 05:30 to 19:00.

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