The Bombela Concession Company, the operator of the Gautrain, and the Gauteng provincial government (GPG), have agreed to a comprehensive settlement of all disputes relating to the Gautrain rapid rail link project’s development period, bringing an end to multiyear protracted legal processes.

Owing to the extended time, significant costs and uncertain outcomes involved in these legal processes, the parties agreed to explore an amicable settlement of all development period disputes. The settlement is subject to certain conditions precedent.

In terms of this conditional settlement, the GPG will pay, for the benefit of the Bombela Civil Joint Venture (BCJV), of which construction company Murray & Roberts is a 45% shareholder, an amount of R980-million within five days from the fulfilment date, together with a payment over two years of a capped amount of R294-million, inclusive of interest in full and final settlement of all development period disputes between the parties.

The settlement pertains to a number of disputes, including the Sandton station cavern and the John Vorster and Jean avenues cantilever bridges in Centurion. A court had previously ruled in favour of Bombela regarding these matters.

The Sandton station cavern claim related to the cost of construction of the station using a method different to the tendered methodology, while the cantilever bridges claim was for additional costs incurred following a design change to the bridges.

The claim for water ingress in the tunnel section between Park station and emergency shaft E2, was also finalised and formed part of the settlement.
 
The settlement benefited Murray & Roberts as it removed uncertainty on any potential tunnel rebuilds, removed the potential contingent liability raised and removed a provision, raised in the 2014 financial year, for its share of potential construction costs.

The Gautrain tunnel, as a drained tunnel, had to be built to meet the concessionaire’s water inflow specifications. On completion, the water ingress was found to be more than the contract specification, which led to a dispute between the parties.

In November 2013, the arbitration panel of Arbitration Foundation of Southern Africa ruled in favour of the provincial government. The parties have agreed that no further work is required by BCJV to address water ingress into the tunnel.

Although the water ingress is not in line with the contract specification, the functionality and safe operation of the system is not threatened by the inflow of water into the tunnel and the system continues to be safe for use.

The parties have agreed to settle all development period disputes on a comprehensive basis. It is expected that the suspensive conditions will be met by mid-December.

The share price of JSE-listed Murray & Roberts rose nearly 3% on Friday.