The building of Cape Town’s 2010 Soccer World Cup stadium is back on track with a R185-million funding guarantee from banking group Investec.
The city put the R2,9-billion project on hold last week when revised costings pushed the total beyond budget.
Mayor Helen Zille said on Wednesday that Investec had guaranteed the outstanding R185-million as payment on a post-2010 operating lease on the stadium, to be built at Green Point.
But she emphasised that this would not give the banking group an inside track on the bidding for the lease.
The guarantee would kick in only in the unlikely event that the bids that did come in were lower than R185-million.
”Both Investec and the city anticipate that the offer of R185-million could be exceeded by other bidders during an open-bid process, which will result in the city accepting the most favourable offer,” she said.
”I guarantee you they are getting no preferential treatment.”
She said she was extremely grateful to Investec for ”this gesture that will enable Cape Town to participate in the 2010 Soccer World Cup in the way envisaged by Fifa”.
She said stadiums were not Investec’s business, but the group understood the implications of 2010 being a failure, and wanted to make sure it did not happen.
Investec confirmed the guarantee in a statement issued on Wednesday afternoon.
”Investec has a long history of financing public-private partnerships and this reflects the group’s ongoing commitment to funding public sector initiatives of this nature,” it said.
The new-look stadium budget, including the Investec guarantee, which would be put before the full council on Thursday for approval, would clear the way for the award of the construction tender.
”Last week this time, we thought we would not be able to go ahead with this project,” said Zille.
She said the city had approached the national Treasury to cover the shortfall, but Treasury had indicated it had reached its ceiling.
”We said to Treasury, ‘And we have reached our ceiling’,” she said.
”It was clear if we did not find an alternative source of funding we would have to can the project.”
Zille said another issue the council had raised with the Treasury — the need for a central government guarantee to cover escalation above the 10% the city has already provided for — remained unresolved.
However, the Treasury had undertaken to put together a task team to examine the issue.
According to documents put before the mayoral committee on Wednesday, the task team would look at how ”excess” escalation is to be managed for all host cities, not just Cape Town.
Mayoral committee member for finance Ian Nielson said post-2010 cash flows had not previously been factored into the financing of the stadium, and at this stage the city did not have any offer on the table from potential operators.
He said the R185-million would come from the council’s own funding ”at this stage”, but because it was set off against future income, it would not result in rates hikes.
The city was looking at a 30-year lease, starting in 2011.
Projections showed a resultant cash flow of at least R260-million at net present value to the city, Nielson said.
Of the total stadium cost of R2,7-billion, R1,9-billion would come from central government, R500-million plus the Investec-guaranteed R185-million from the city and R212-million from the Western Cape provincial government.
The consortium named as preferred bidder, Murray and Roberts/WBHO, is expected to be on site before the end of this month.
Investec describes itself as an international, specialist banking group that provides a diverse range of financial products and services to a ”select client base”.
Founded in South Africa, it is now listed in London and Johannesburg. — Sapa