2005-11-08,+Gautrain+Blues,+Business+Day

Business Day, Johannesburg, 07 November 2005
=Shilowa Express’s track record so far is confusion and a high-speed cost rise=


 * Chantelle Benjamin, Johannesburg Metro Editor**

THERE is confusion and a growing sense of unease about the Gautrain Rapid Rail Link Project, especially the cost to taxpayers.

In May 2001, Gauteng premier Mbhazima Shilowa, who initiated the project, told an investor conference that the train would cost R7bn, the tender process would begin in 2002, financial closure was expected in 2003 and the first trains would be operating by next year.

Nearly five years down the line, there is still uncertainty about costs, and construction is expected to start only next year. The trains will be tested in 2009, and the entire system is expected to be running by March 2010, just before the start of the Soccer World Cup.

The construction costs of the project have trebled since 2001, to R20bn.

The cabinet has given the Gautrain conditional approval. Now project leader Jack van der Merwe will report to Parliament this week on the status of the project before the cabinet gives its final approval. It appears that the cabinet has some reservations about the project.

Gauteng will contribute about R4bn to costs, with the rest coming from national treasury.

The project has been described by Transport Minister Jeff Radebe as one of “national significance”, and key to the creation of a unified, national rail system. The Shilowa Express, as it has been dubbed, was never intended to replace Gauteng’s existing Metrorail service.

The high-speed train is intended to reduce traffic on freeways between Johannesburg, Pretoria and the province’s international airport.

With an estimated travel time between Pretoria and Johannesburg of about 35 minutes and 12 minutes from Sandton to the airport, this luxury train — in the tradition of London’s Heathrow Express — is intended for motor-vehicle owners in a hurry.

There is some confusion about the cost of the project, particularly after Finance Minister Trevor Manuel’s announcement recently during his medium-term budget speech that government’s exposure would be R20bn.

When the Gautrain was estimated to cost R7bn, this assumed it would be completed by next year. The four-year delay has pushed the price closer to R12bn — in truth R20bn, considering nominal value over five years. Van der Merwe likens it to buying a house for R1m, which will cost R3m if it is paid off over time.

Part of the cost escalation included R1bn in value-added tax, which was not included in the original costing, apparently because the project hoped it would be given a tax rebate. The receiver of revenue took this under review and turned down the project.

Van der Merwe says the costs are not likely to increase because the project has an affordability limit, but government might have to carry inflation costs if escalation is higher than estimated.

The Gautrain will not be run by government. Ownership will be transferred to the Gauteng government at the end of a concession period of 19,5 years — nearly five years for construction and a 15-year operating period. Operation and maintenance of the system will be carried out during the concession by RATP Développement in association with South African partners, through a local operating company.

The intention is to provide an integrated system that co-ordinates trains, buses and, ideally, taxi’s, to ensure that people who gained 30 minutes by taking the train to Pretoria, do not have to wait an hour for transport from the station to their destination.

RATP operates the integrated multimodal Paris transport system, which includes the metro, rapid rail and buses.

During a recent media visit to their offices in Paris, company representatives said they were confident they could co-ordinate transport modes in SA and run them to world-class standards.

Van der Merwe says Gautrain tickets will cost about R40, and will not be subsidised by government. This will include the price of parking a car at a station, the train trip and transport to and from the destination station.

“The ticket price has to be less than the perceived cost of private car use — the direct petrol cost and a little bit of the maintenance cost,” he says.

“In today’s terms, that is between 50c and 60c a kilometre.”

The train, an Electostar, has a proven record. Its 104 cars will be designed by Bombardier, the world leader in train design and supply. The components will be assembled in SA as part of the project’s job creation obligations.

Mike Burgess of Bombardier says the train will contain a number of safety features designed to protect passengers.

These include an automatic braking system that will stop the train if the driver ignores a stop signal; doors that cannot be opened after a train departs; CCTV cameras connected to the drivers’ cab in every carriage and an emergency communication system. All CCTV footage will be loaded onto disks which will be handed in every day and stored.

The train is expected to attract over 40000 commuters a day — about 25% of existing car users according to a model used by transport engineers.

But transport experts suggest that, based on usage in other countries, 250000 is probably closer to the truth.

The project partners are Bombardier; Bouygues Travaux Publics, a specialist in tunnelling; Murray & Roberts, SA’s second-biggest construction group; and empowerment contractors ZMK Construction, Blackstone, Tiespro, Biyana and Realeka.


 * From: http://www.businessday.co.za/articles/national.aspx?ID=BD4A109791**

Business Day, Johannesburg, 07 November 2005
=A ‘new apartheid’ juggernaut=


 * Mike Muller**

COMING so soon after a stalled car-free day, the news that Gautrain will cost more than R20bn calls for an urgent review of the project. There is now a real danger that it will be a white elephant that will cause traffic gridlock for decades and reinforce the region’s apartheid geography.

Specifically, government’s principals should respond to some key questions about the viability and wisdom of the proposed project. There are three pieces of evidence they should consider.

The first is that, across the world, urban rail projects have failed to meet their “ridership” projections.

Second, the tripling in cost of the project — from R7bn to R20bn in just three years — has not been matched by any new benefits, so surely the economic justification for the project must have collapsed.

Finally, although the project will absorb the bulk of public transport expenditure in Gauteng for the next five years, there is no overall public transport plan to justify this skewed allocation of resources and thus no prioritisation of the interventions that are required to keep Gauteng moving.

On the first point, the review of new-build urban rail projects over the past 30 years, published last month by the Institution of Civil Engineers, must concern Gauteng residents and government.

It found that, while the quality of capital cost estimates in new projects had improved, the same was not true for operating costs. “Operating costs were routinely underestimated (by a factor of two to three) while revenues were overestimated (typically by 100%).”

Since what matters about a public transport project is whether people actually use it, the finding that “ridership” is typically wildly overestimated should make the planners very worried. The fact that the project will be dependent on establishing effective new local public transport links at each station to get users to their final destinations makes Gautrain particularly vulnerable.

Turn then to the economic analysis. There has been minimal transparency about this. However, we can read between the lines from the fact that the private sector is not going to increase its contribution despite the price increase. The original proposal saw them covering nearly half the capital cost of the project. According to Gautrain Project director Jack van der Merwe in a recent public statement, their contribution will stay at approximately R3bn.

The reason they are not prepared to risk additional investment is obvious — they are telling us that there is little prospect that they will get their money back if they do.

Why then should the public sector increase its contribution from R4bn to R17bn? Have the benefits gone up four-fold? In the absence of information to the contrary, we must assume that the cost-benefit ratio (one of the criteria used to support decisions on projects of this nature) has shifted dramatically since the preliminary approval for the project was first given.

There may still be a case for a 2010 flagship although there must surely be limits on how much we spend on “vanity projects” of little direct public benefit. So the main concern must then be the impact on transport in central Gauteng more generally.

Here we must acknowledge that the transport problems of the region are not limited to getting passengers from Johannesburg International Airport and taking people from central Johannesburg and Sandton to Centurion and Pretoria.

Traffic on the arteries such as the N3, between Sandton, Eastgate and Germiston is often gridlocked for hours. The east-west N12 is not much better. The list of key development nodes that are not served by Gautrain is a long one. What we need is a regional transport plan, backed by a structured programme of investment — in both road and rail — to keep people moving.

Where is that programme? All we see is the one huge element called Gautrain. While its cost was a relatively modest R3bn, a flagship project could be supported even if it addresses only the middle-class market that is its stated target. But at R20bn, unless there is something that the finance minister and premier of Gauteng are not telling us, there is going to be precious little money for public transport infrastructure in Gauteng over the next five years. The other projects are simply going to be run off the road by the Gautrain juggernaut.

There are other issues. The project cost estimates exclude the extra congestion costs it will impose on northern Johannesburg for three years when Oxford Road and Rivonia Road will be closed for construction — although good practice would count these as part of the capital cost of the project.

There is also no explanation of the logic of linking Pretoria and Johannesburg International via Sandton when there is an existing line, just over half the distance, between the two. The main defect of this, one suspects, is that it runs through Tembisa, one of the fastest growing urban nodes in Gauteng.

This highlights the final, really pernicious issue. Gautrain is an avowedly apartheid project — albeit a new-generation apartheid. It aims to meet the needs of a middle-class minority and excludes (through its pricing and its route) the poorer majority. It is designed to keep them separate. If this is how we integrate our first and second economy in Gauteng, we have a long way to go before the two meet.

There are ways forward. The assumption that traffic on the N1 will continue to grow is questionable. After a decade of democracy and getting up earlier every month, many of the good burghers of Pretoria, who in 1994 refused to contemplate relocating, are now beginning to move from the burglary capital of the province to somewhere safer.

Our transport planning needs to be guided by an understanding of where people live and work, and why and what we need to do to break down the apartheid geography that continues to throttle our economy. Until we have that plan and are sure that Gautrain will contribute to it, we should put the project on hold.


 * Muller, currently a visiting research fellow at the Wits University School of Public and Development Management, is a civil engineer who until recently commuted daily between Johannesburg and Pretoria.


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A109677**