More uphill for the Gautrain

The Gautrain Rapid Rail Link still faces stiff opposition from within the government as its true costs emerge.

The train sailed through one obstacle this week when a court challenge to the structure of the empowerment component in Bombela, the preferred bidder to build and operate the train, was thrown out. But Cabinet has yet to give its final approval to the project and, according to people familiar with the debate in the government, the Department of Transport is unconvinced of the merits of the plan in its current form.

Minister of Finance Trevor Manuel told Parliament in his mini-Budget speech last week that the Gautrain would cost more than R20-billion, about three times the R7-billion figure that had been publicised since 2002.

Sources close to the negotiations say the total is between R23-billion and R24-billion, with the cost to the national fiscus approaching R21-billion and Bombela chipping in R2-billion.

The vast bulk of the government funding will come from grants made by the National Treasury, rather than from Gauteng’s equitable share.

‘It is a bit like someone asking you to ‘help’ them buy a beer, and then telling you they’ve got 20c, if you can just contribute the remaining R5,80. You’re not helping to buy the beer, you are buying it,” one Treasury official quips. Nevertheless, Manuel is publicly backing the plan, describing it as a project of ‘national significance”.

Minister of Transport Jeff Radebe has not responded publicly to the new costs, and the political pressure associated with the 2010 World Cup makes most of those concerned reluctant to comment on the record, but Lucky Montana, the Deputy Director General in charge of public transport, hints that final approval is not signed and sealed.

‘Cabinet has granted in principle approval, subject to a certain level of integration between the Gautrain and the rest of the transport network, and the question of costs. Detailed work is being done on integration and if Cabinet is satisfied, it will act,” he says.

Jack van der Merwe, who is Gauteng’s project leader on the train, says that the R20-billion figure is indicative of the total exposure of national and provincial governments combined over the life of the project.

The figure he prefers to use is R12-billion, net present value for the train in 2005.

‘It’s a bit like you’ve bought a house for R1-million, once you’ve done all the repayments you may have spent R2,5-billion,” he explains, saying costs cannot increase further as Bombela will carry the risk of cost escalations itself.

The affordability threshold of R20-billion was not made public earlier, he says, because the provincial government did not want to give the bidders an opportunity to ratchet up their prices.

Asked whether political support for the deal from Radebe and Manuel was won on the basis of a much more modest price, Van der Merwe insists that both were fully appraised of the revised costing when they piloted the in-principle approval through Cabinet.

‘Cabinet is not a rubberstamp, but the minister of finance and his department have been fully on board from day one,” he says.

But it seems clear that not everyone in Cabinet was so well informed. The Cabinet memo on which in-principle approval was based made no mention of R20-billion, Montana confirmed, and discussions with Transport officials suggest that they believed the national government would only have to contribute around R3,5-billion.

Some officials have argued that the Gautrain has been conceived only as a massive civil works programme, not a real transport solution, and should be scrapped, but Montana says that is not the department’s position.

‘There is potential benefit, if we can resolve the question of volumes using the train, the level of subsidies relative to other forms of transport and concerns of integration,” he says.

Certainly the new figures dwarf national investment in public transport. Allocations for capital improvements in passenger rail transport nationally are derisory by comparison. The 2005 Budget granted R300-million over the next two years, most of it for the upgrading of Metrorail rolling stock and infrastructure.

Angry protests by commuters over persistent delays, a Constitutional Court decision compelling Metrorail to provide adequate security for passengers, and the recent collision involving the Shosholoza Meyl and the Blue Train point to the urgent need for action, says Montana.

Other officials privately say there are concerns that resources needed for this work will now be diverted to the Gautrain, and that the project in its current form is not adequately integrated into a wider transport plan for Gauteng.

Bureaucrats in other provinces can only look on in envy. ‘There are two explanations,” says one Western Cape official. ‘Either it is because the Gauteng government and Luthuli House are close, or it’s because this is exactly the kind of well planned and sophisticated mega-project that Treasury wants to fund at the moment. If you go to them with a plan, you’re going to get the cash.”