1. Gautrain Rapid Rail Link Parliamentary Presentation to Transport Portfolio Committee
Jack van der Merwe (Pr. Eng)
Project Leader: Gautrain
Chief Executive: Public Private Partnerships
Gauteng Provincial Government
8 November 2005

2. Content Background, rational & objectives System overview PPP process
Selection of preferred bidder
Financial liabilities
Public transport integration
Way forward

3. Background, Rational & Objectives

4. Background

5. The Powerhouse of Africa
Gauteng is:
Less than 2% of Country’s surface area
Home to 70% of the SA’s 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 end of 2004

6. Gauteng – Economic Development 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

7. Rationale

8. Transport Challenges
Mobility
Maintenance
Accessibility

9. Share of Gauteng in National Vehicle Fleet5 10 15 20 25 30 35 40
Provinces
Western Cape
Eastern Cape
Northern Cape
Free State
KwaZulu-Natal
North West Province
Gauteng
Mpumalanga
Northern Province

10. Gauteng Vehicles/km Provinces Western Cape Eastern Cape Northern Cape50
100
150
200
250
300
350
Provinces
Western Cape
Eastern Cape
Northern Cape
Free State
KwaZulu-Natal
North West
Gauteng
Mpumalanga
Northern Province
TREND

11. Objectives of the Gautrain Project

12. 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

13. Transportation Goals
Alleviate severe traffic congestion (traffic volumes in corridor growing at 7% p.a. for more than a decade)
Show Government’s 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

14. 2000 Northbound and Southbound Vehicle Volumes

15. 2005 Northbound and Southbound Vehicle Volumes

16. 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

17. 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

18. Overview of the Proposed System

19. Hatfield Pretoria Centurion Midrand Marlboro Sandton Rhodesfield JIA
Preferred Route
Sandton
Rhodesfield
Anchor Stations
JIA
JIA
Rosebank
Rosebank
Stations
Airport
Park Station
Park Station

20. 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 passengers trips per day
Frequency every 10 – 30 minutes
Minimum operating hours 05h30 – 20h30
Safety and security

21. Interesting Facts (1)
Approximately 104 new commuter rail coaches will be 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.

22. Interesting Facts (2)
concrete sleepers will be manufactured for use in the track
tons of steel will be required to manufacture the steel rail track
m² of bridges and viaduct structures will be constructed
More than new parking bays will be required
65 road intersections in the vicinity of stations will be upgraded

23. Market & Ridership

24. Transport mode (Commuters)
Market Focus
House-hold Income
Transport mode (Commuters)
Rail
Taxi
Bus
Car
Commuter Market Focus

25. 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

26. 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

27. Concept Legend: 10 km radius Rail Line & Rail Operational Area
Station Precinct
Dedicated Feeders
Dedicated Distributor
Existing PT Service
Catchment area
Legend:

28. Modelled Single Journey Fare
SERVICE
ORIGIN
DESTINATION
DISTANCE
COST
Commuter
Pretoria
Johannesburg
57 km
R 16,40
Sandton
46,8 km
R 14,36
Rhodesfield
19,0 km
R 9,08
Airport
JIA
20,4 km
R 70,40
Cost less than car, more than existing bus / taxi / rail

29. What Will the Economic Impact Be?
Number of jobs created / sustained:
Construction :
Operating and Maintenance : p.a.
Urban economic activity : p.a.
Increased business sales : R 6 billion
Increase in Gauteng GGP : 0,7 - 1%

30. PPP Process

31. 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

32. Implementation Process
Four pillars
Political will & commitment
Viable project (base case design)
Technical
Financial
Legal/Institutional
Funding (for Infrastructure & Operations)
Government’s portion
Private Sector’s portion
Community acceptance & Buy-in
Socio-economic benefits
Power of expropriation

33. Process Consortium EXPENDITURE INCOME CONSULTANTS Civil Works
Elec. / Mech.
Station & Feeder
Land & EIA
Rolling Stock
Operate & Maintain
Modeling Rider ship
Value Add
Engineering, Town Planning and Economic Development
Feasibility
Authorisation
Contractors
Operator
RollingStock
PPP-U 1
Financial and Banking
Financial Model (BOT)
Consortium
Budget & Authorisation
Government
Gauteng National Treasury
Blue IQ PPP
Pre-Qualification & RFP
Banks & Financial Institutions
Equity &
Financing
Legal and Institutional
Final selection of bidder
PPP-U 2
Financial Closure
Funding
Local International
Investment Aid
PPP-U 3
Construction
Commissioning

34. PPP Components Technical content Financial proposal Legal mark-up
Socio-economic Development

35. Socio-Economic Development (1)
BBBEE
Equity
Ownership
Directorship
Training & development
Sub contracting
Procurement
Job creation

36. Socio-Economic Development (2)
Promotion of SMME’s
Focus on women, youth and people with disabilities
Local content
Local labour
Investment / focus on marginalised areas

37. PPP Requirements (1) Feasibility Value for money Affordability
Public Sector Comparator (PSC) (What will it cost if Government does the work through normal procurement process; and including completion and integration risk 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

38. PPP Requirements (2) Feasibility (continue) Risk transfer
Identify, cost and allocate various risks to the role players best equipped to mitigate and manage them

39. Selection of Preferred Bidder

40. 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

41. Procurement Process RFQ : Two pre-qualified bidders May 2002
RFPI : Discussions May – Sept. 2002
RFPII : Issued 29 Nov 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 ?

42. 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

43. Bombela: Contractual Entities
Bombardier: %
Bouygues: %
M&R: %
SPG : %
CONCESSIONAIRE
BOMBELA
RATP: %
M&R: %
SPG: %
TURN KEY
CONTRACTOR
OPERATOR
CIVIL
CONTRACTOR
E&M
CONTRACTOR
E&M
MAINTAINER

44. Bombela Rolling stock

45. Financial Liabilities

46. 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

47. 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 )

48. 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

49. Affordability Gap Bidders Position
Provincial Affordability TAI Revised
EIA Impacts
Risk Revision
Affordability Revision
Best and Final Offer Process
Costing Challenges
Specification Changes
Affordability Gap

50. Affordability of Gautrain
FIFA 2010 Soccer World Cup
Gautrain formed an integral part of South Africa’s 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

51. 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 country’s commitment for the FIFA 2010 Soccer World Cup

52. 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

53. 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%.

54. 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

57. Gautrain : A Catalyst for public Transport in South Africa

58. 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 ( ) includes:
Background
Objectives
Strategy (including consultation), and
Project Procurement Process

59. 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

60. Gautrain Rapid Rail Aligned With
Integrated Transport Plans:
Ekurhuleni, Johannesburg, Tshwane
Integrated Development Plans
Airports Company Planning
SARCC Rail Network Planning
FIFA 2010 Soccer World Cup Bid

61. 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’.

62. 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

63. More than Just Another Transport Project
The Gautrain will promote
Public Transport
SMME & BBBEE Development
Tourism
Business development
The project stimulates
Economic growth
Investment
New development
Job creation
Design to
Restructure urban areas
Reduce travel distances, time and cost
Improve city sustainability

64. Way Forward

65. Timelines RFQ- Process Investors Conference
Announce pre-qualified bidders
Announce Preferred & Reserve Bidder
Construction Commence
Prepare RFP documents
Sep 2001
End April
2002
21 Oct
29 Sep
2003
30 Sep 2003
Mid
2005
Late 2005
EIA - Process
Financial Close
EIA Report & Draft EMP
ROD
Infrastructure
Act
requirements
Negotiate with Bidder(s)
RFP
Phase II
Phase I
29 Nov
Proclamation and Land acquisition
Final EMP
ROD Appeals
Detail Design
Phase III
(BAFO)
Apr 2004

66. 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 in this phase

67. 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

68. 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

69. Thank You

70. Rationale

71. Road capacity: Government
Congestion
Government Policy
Mobility
Road capacity: Government
Road capacity: Toll
Private Transport
Public Transport
Bus
Taxi
Rail
Metrorail
Gautrain
HOV lanes
Extra capacity

72. Rail Metrorail Gautrain
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