Gautrain benefits 'outweigh costs'
28 October 2005
The Gautrain is expected to cost R20-billion, nearly three times the 2002 sum of R7-billion. Finance Minister Trevor Manuel confirmed the new figure, an increase of more than 70 percent, in Parliament this week.
The Gautrain consists of an 80km rail link between Johannesburg, Tshwane and Joburg International Airport.
"The potential socio-economic benefits far outweigh the cost of the project," said Ignatius Jacobs, Gauteng provincial minister for public transport, roads and works.
Some of these benefits include: almost 93 000 jobs during the construction and commissioning phases; additional gross geographical product (GGP) during construction estimated to be about R5-billion, and about R165-million a year during the operation and maintenance of the system; a provincial GGP increase of between 0.7 percent and 1 percent during the implementation phase; the employment of about 3 500 people a year during the 15-year
operational phase; and up to 40 000 jobs in other economic activities in the vicinity of the stations.
The Bombela Consortium will operate the high-speed rail link for 15 years, after which it will be handed over to the province.
Other benefits are the projected time savings by commuters using the Gautrain of R933-million annually, as well as savings in accident costs of R15-million a year. There will also be environmental savings: a massive reduction in carbon dioxide emissions each year.
The major reasons for the cost increase are:
- additions as a result of the environmental impact assessment, which necessitated changes to the route alignment and the introduction of mitigation measures;
- the net effect of more passengers and the consequent increase in the size of the system as a result of the completion date moving from 2007 to 2010;
- the recent increases in land costs influencing the acquisition of land
needed for construction;
- the reviewed risk values as a result of the fact that in a private-public partnership project all risks need to be priced and incorporated;
- VAT on the construction total that was originally not included in the 2002 costing; and
- additional tunnel lining as a result of geotechnical conditions, the relocation of bulk services and reviewed insurance premiums.
"Gautrain is a turnkey project that will not only change the face of Gauteng but also increase the province's competitive edge," Jacobs said.
The Gautrain would transform public transport and would fulfil government goals like broad-based black economic empowerment and small, medium and micro enterprise development, encourage economic development and promote business tourism, he said.
The Gautrain project team is negotiating with Bombela Consortium, the chosen bidder, to reach financial closure on the project by
the end of 2005. Construction is expected to begin in early 2006, and the Gautrain should be complete in time for the 2010 Soccer World Cup.
The costing from Bombela is a "fixed price lump sum contract", which means that there will be no future unexpected cost increases. The final costing is within the affordability limit set by the National Treasury.
Source: City of Johannesburg