Gautrain Rapid Rail Link Parliamentary Presentation to Transport Portfolio Committee

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Gautrain Rapid Rail LinkParliamentary
Presentation toTransport Portfolio Committee

• Jack van der Merwe (Pr. Eng)
• Project Leader Gautrain
• Chief Executive Public Private Partnerships
• Gauteng Provincial Government
• 8 November 2005

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Content

• Background, rational objectives
• System overview
• PPP process
• Selection of preferred bidder
• Financial liabilities
• Public transport integration
• Way forward

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Background, Rational Objectives
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Background
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The Powerhouse of Africa

• Gauteng is
• Less than 2 of Countrys surface area
• Home to 70 of the SAs workforce and is
  responsible for 49.6 of all employee
  remuneration
• Accounts for some 33 of GDP of South Africa
• Accounts for about 10 of Africa's GDP and is the
  fourth largest economy in Africa
• In the past five years, our provincial economy
  grew at an annual rate of 3.7, increasing to
  over 5 in 2004
• FDI has grown from R450 million in 2001 to R1.5
  billion in 2003
• Most developed infrastructure in Africa
• The population is expected to exceed 9 million by
  the endof 2004

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Gauteng EconomicDevelopment Strategy

• Existing economic strengths
• Mining
• Heavy Industry
• Financial Banking sector
• Proposed strategy
• Smart industries - Gauteng the smart Province
• Move toward high value-added manufacturing
• Enhancing the business services (Finance
  Banking) sector and business tourism

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Rationale
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Share of Gauteng inNational Vehicle Fleet
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Gauteng Vehicles/km
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Objectives of the Gautrain Project
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Development Goals

• Economic growth, development and job creation
• Must meet other goals of Government (SME
  promotion, Business tourism, BEE, etc.)
• To promote business tourism by means of the link
  between JIA and Sandton

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Transportation Goals

• Alleviate severe traffic congestion (traffic
  volumes in corridor growing at 7 p.a. for more
  than a decade)
• Show Governments commitment to the promotion of
  public transport (National Land Transport
  Transitional Act, Act 22 of 2000) Catalyst
  public transport project
• Improve the image of public transport with this
  project and attract more car users to public
  transport
• To link to the Tshwane Ring Rail Project, linking
  Mamelodi, Atteridgeville and Soshanguve /
  Mabopane
• Part of holistic transport plan and network for
  Gauteng
• Catalyst public transport project of national
  importance

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2000 Northbound and Southbound Vehicle Volumes
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2005 Northbound and Southbound Vehicle Volumes
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Gautrain

• Gautrain is a flagship public transport project
  of national importance. It can be the catalyst to
  free existing resources or to generate new
  resources to promote public transport in a
  holistic fashion

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Spatial Development and Urban Planning Goals

• To contribute towards urban restructuring,
  shortening travel distances and improving city
  sustainability
• Stimulate the renovation and upliftment of the
  Johannesburg and Tshwane CBDs
• Link the main economic nodes in Gauteng with JIA

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Overview of the Proposed System
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Hatfield
Pretoria
Centurion
Midrand
Marlboro
Sandton
Preferred Route
Rhodesfield
Anchor Stations
JIA
Rosebank
Stations
Airport
Park Station
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Technical Specs

• International standard gauge
• Maximum speed 160 180 km / h
• Modern state of the art trains
• Thus totally different from existing SA system
• Different trains for commuters and air passengers
• Initial demand 134 000 passengers trips per day
• Frequency every 10 30 minutes
• Minimum operating hours 05h30 20h30
• Safety and security

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Interesting Facts (1)

• Approximately 104 new commuter rail coaches
  willbe manufactured
• Approximately 250 new bus coaches will be used
• 3,6 million train kilometres and 674 million
  passenger kilometres will be travelled per year
• 10,6 million bus kilometres will be travelled per
  year
• There will be a train at least every 10 minutes
  during the peak time at stations between
  Johannesburg and Pretoria.

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Interesting Facts (2)

• 260 000 concrete sleepers will be manufactured
  for use in the track
• 20 000 tons of steel will be required to
  manufacture the steel rail track
• 112 000 m² of bridges and viaduct structures will
  be constructed
• More than 9 000 new parking bays will be required
• 65 road intersections in the vicinity of stations
  will be upgraded

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Market Ridership

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Market Focus
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Project Target Market

• Initial demand 134 000 passengers trips per day
• Car users (Attract with excellent service /
  competitive travel times)
• Complementing existing transport modes (Taxi,
  Bus Rail)
• Cater for all trip purposes (Peak and off peak)
• International tourists and airline passengers

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Feeder and Distribution Services

• Access to the Gautrain - one of the key success
  factors
• Initially a large part of the market segment not
  within walking access of stations
• Provide dedicated bus services
• Door-to-door service and travel time
• Convenience of transfers
• Same quality and Level of Service offered from
  point of access to front door at destination
  end of trip
• Integration with existing and other new systems
• Ample park and ride facilities

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Concept
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Modelled Single Journey Fare
Cost less than car, more than existing bus / taxi
/ rail
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What Will the Economic Impact Be?

• Number of jobs created / sustained
• Construction 93 000
• Operating and Maintenance 2 700 p.a.
• Urban economic activity 40 000 p.a.

Increased business sales R 6 billion

Increase in Gauteng GGP 0,7 - 1
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PPP Process
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Project Process

• Fundamental Principles
• Multi-billion Rand project
• Cannot be funded in total by Government
• Can only be developed as a Public-Private
  Partnership
• PPP project (BOT type project)
• Must have political buy-in the private sector
  must show an appetite for the PPP project
• Must comply with all legal requirements

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Implementation Process

• Four pillars
• Political will commitment
• Viable project (base case design)
• Technical
• Financial
• Legal/Institutional
• Funding (for Infrastructure Operations)
• Governments portion
• Private Sectors portion
• Community acceptance Buy-in
• Socio-economic benefits
• Power of expropriation

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Process
CONSULTANTS
EXPENDITURE
INCOME
Authorisation
Consortium
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PPP Components

• Technical content
• Financial proposal
• Legal mark-up
• Socio-economic Development

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Socio-Economic Development (1)

• BBBEE
• Equity
• Ownership
• Directorship
• Training development
• Sub contracting
• Procurement
• Job creation

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Socio-Economic Development (2)

• Promotion of SMMEs
• Focus on women, youth and people with
  disabilities
• Local content
• Local labour
• Investment / focus on marginalised areas

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PPP Requirements (1)

• Feasibility
• Value for money
• Public Sector Comparator (PSC)(What will it cost
  if Government does the work through
  normalprocurement process and including
  completion and integrationrisk and cost)
• Affordability
• Total cost of project, expressed in Net Present
  Value (NPV)
• Yearly cost to the province (contingent
  liability)
• Maintain the 80/20 ratio in social vs.. rest
  split in budget

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PPP Requirements (2)

• Feasibility (continue)
• Risk transfer
• Identify, cost and allocate various risks to the
  role players best equipped to mitigate and manage
  them

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Selection of Preferred Bidder
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Political Process

• Pre-feasibility study Dorsch Consult 1997/98
• Premier announces Gautrain Opening of
  Legislature January 2000
• Appointment of Political Cabinet Committee to
  oversee the project
• Overseas visit by Political Committee 2001
• PPP process

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Procurement Process

• RFQ Two pre-qualified bidders
  May 2002
• RFPI Discussions May Sept.
  2002
• RFPII Issued 29 Nov 2002
  Submitted 30 Sept 2003
• RFPIII (BAFO) Submitted 29 Jan 2005
• FBAFO 26 March 2005
• Preferred Bidder 2 July 2005 ( and Reserve
  Bidder )
• Financial close December 2005 ?

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RFQ 2 Pre-Qualified Bidders (May 2002)

• Bombela Consortium
• Bombardier Transportation
• Bouygues Travaux Publics
• Murray Roberts
• RATP International
• SPG group
• Loliwe Rail Contractors
• Loliwe Rail Express
• Standard Bank
• RMB
• ABSA

• Gauliwe Consortium
• CAF
• Dragados
• Grinaker LTA
• Metro de Madrid
• CANAC
• Ufudo
• Tirisano
• Nedbank
• Investec

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Bombela Contractual Entities
Bombardier 25.0 Bouygues
25.0 MR
25.0 SPG
25.0

• CONCESSIONAIRE
• BOMBELA

RATP 51.0 MR 23.9 SPG 25.1
TURN KEY CONTRACTOR
OPERATOR
CIVIL CONTRACTOR
EM CONTRACTOR
EM MAINTAINER
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Bombela Rolling stock
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Financial Liabilities
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Gautrain Cost Estimate

• Initial estimate R 7,0 billion (Feb 2002)
• Cost increases ( MEC Ignatius Jacobs 26 Oct 2005)
• EIA requirements (29 Sept 2003) route alignment
  changes mitigating measures
• Net effect of higher ridership and the consequent
  increase in the size of the system due to opening
  date moving from 2007 to 2010 and the recent high
  increases in land costs impacting on the
  acquisition of land needed for the construction
  of the project
• Reviewed risk values due to the fact that in a
  PPP project all risks need to be priced and
  incorporated.
• VAT on the construction elements that was
  originally not included in the 2002 costing
• Reviewed contingencies as a consequence of the
  above factors

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Gautrain Cost Estimate

• Cost increases ( MEC Ignatius Jacobs 26 Oct 2005)
  (continue)
• A few minor reasons that have contributed to the
  increased cost are additional tunnel lining due
  to geotechnical conditions, relocations of bulk
  services and reviewed insurance premiums
• Result of these cost increases Feb 2002
  estimate increased to R12,0 billion ( a 71 cost
  increase)
• If this estimate is escalated to a Dec 2005
  number and expressed as a total exposure of
  government over the next 5 years (in nominal
  terms ) it is R 20,0 billion plus ( as stated by
  Min Manuel )

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Affordability of Gautrain

• After receiving RFP II in Sept 2003 it became
  apparent that the Province would have to borrow
  funds to stay within the 80/20 split
• Discussions with Min Manuel (principle agreement)
• Provincial borrowing powers
• Revised TA1 authorisation
• Financial model of Provincial income and
  expenditure for next 20 years
• BAFO process to reduce cost and risk to Province

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Affordability Gap
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Affordability of Gautrain

• FIFA 2010 Soccer World Cup
• Gautrain formed an integral part of South
  Africas bid document
• Gautrain was reported on extensively by FIFA in
  its evaluation and final recommendation
• Must form the backbone of the public transport
  system in Gauteng for the World Cup
• Achieving this in time becomes an RSA undertaking

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Affordability of Gautrain

• At the beginning of 2005, National Treasury (NT)
  had questions around the spending pressures on
  Social Services (over and above the 80/20 split)
  and the pressures Gautrain will put on future
  Provincial budgets
• a national contribution for Gautrain is
  investigated
• National Department of Transport sees Gautrain
  as a public transport flagship project of
  national importance
• NDoT submits a Cabinet memo to approve the
  principle of
• National financial support for Gautrain
• Gautrain as a national flagship public transport
  project
• Completion of Gautrain linked to countrys
  commitment for the FIFA 2010 Soccer World Cup
  

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Affordability of Gautrain

• NDoT cabinet memo approved in principle
• Busy developing second memo to expand on the
  quantum of the national contribution towards the
  Gautrain
• Additional funds required to link existing public
  transport to the Gautrain and ensure a holistic
  public transport system for the province
• Task team appointed to develop a public transport
  integration document
• NB TAI (revised) TAIIB authorisation received,
  conditional to the approval of the second Cabinet
  Memo

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Funding

• The public sector funding of the Gautrain's
  capital costs over the five year development
  period will be sourced from three places 
• The Gauteng provincial government's equitable
  share (i.e. the provincial budget (MTEF))
• provincial borrowing from the National Treasury
  and
• a conditional grant from National Treasury via
  the National Department of Transport. 
• The conditional grant via the Department of
  Transport's budget makes up 50 of the public
  sector's capital costs of the project, with the
  provincial budget and provincial borrowing sums
  making up the remaining 50.

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Funding

• It needs to be emphasised that the bid received
  from the Preferred Bidder is a fixed price lump
  sum contract which means that after financial
  close has been reached (Dec 2005) there will be
  no future cost increases.
• The final cost will be within the affordability
  limit approved by National Treasury in TA1 in
  June 2005

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Gautrain A Catalyst for public Transport in
South Africa

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Gautrain in PLTF

• Although Gautrain has been incorporated in a
  number of places, and impacts on a number of PLTF
  strategies (such as future rail network,
  promotion of public transport, modal integration,
  spatial densification, etc.) it is also
  highlighted separately in the PLTF.
• Section 8.6 of the PLTF (2003-2008) includes
• Background
• Objectives
• Strategy (including consultation), and
• Project Procurement Process

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Gautrain Rapid Rail Aligned With

• Gauteng Spatial Development Framework
• Gauteng Provincial Land Transport Framework
• Gauteng Transport Strategy and Initiatives In
  Perspective
• Gauteng Integrated Land-use and Transport
  Framework
• Gauteng Strategic Public Transport Network

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Gautrain Rapid Rail Aligned With

• Integrated Transport Plans
• Ekurhuleni, Johannesburg, Tshwane
• Integrated Development Plans
• Ekurhuleni, Johannesburg, Tshwane
• Airports Company Planning
• SARCC Rail Network Planning
• FIFA 2010 Soccer World Cup Bid

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Public Transport Integration Task Team

• Joint Task team appointed from all three spheres
  of Government to
• consider opportunities that the Gautrain Project
  provides to maximise the achievement of the
  objectives of public transport in particular and
  transport transformation more generally through
  either strategic or operational integration.

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Public Transport Integration Task Team

• Strategic Integration refers to
• ways to integrate Gautrain with other strategic
  land use and transport interventions, in a manner
  that is consistent with the policy and planning
  processes
• Operational Integration refers to
• specific opportunities to improve the business
  prospects of both Gautrain and other public
  transport systems in Gauteng through operational
  cooperation.
• Report completed, final editing and input
  document for second Cabinet Memo

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More than Just Another Transport Project
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Way Forward
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Timelines
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Financial Closure

• Negotiations with successful bidder commenced
  after the announcement on 2 Jul 2005
• The essence of this process is to finalise the
  concession agreement
• Negotiations with lenders will also take place
  inthis phase

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Enabling Works

• In this phase, that will run concurrent with
  financial closure, the land will be prepared for
  construction
• Moving of bulk services such as Telkom, Eskom,
  Rand Water and gas lines
• This phase is necessary to win time and to ensure
  that the system will be fully operational by 2010
• This is also the phase in which the preferred
  bidder will finalise preliminary and final design

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Commencement of Construction

• Construction will commence in early 2006
• Construction period 54 months
• JIA Sandton Link will be operational earlier
• Full system operational in April / May 2010

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Thank You

• www.gautrain.co.za

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Rationale
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• HOV lanes
• Extra capacity

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• Wil need
• Major extensions to network
• New rolling stock
• Signalling upgrade
• Concessioning (operations)
• Limited PPP possibility

• Purpose made to address congestion in the Tswhane
  JHB corridor
• Ideal for PPP aproach