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Mar 26, 2010

A trip on the Gautrain with the man who drove the R25,4-billion project

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Gautrain Management Agency (GMA) CEO Jack van der Merwe stands on the Marlboro station platform and waits for the Gautrain to arrive.

It is a Wednesday in March, and he is hitching a ride from Marlboro station to Sandton station, and from Sandton station to the OR Tambo International Airport station while phase one of the rail system is being tested in preparation for a June 8 start.

Each train also has to run 3 000 km before it can be certified safe to carry passengers.

In less than three months the airport link has to be ready to carry soccer fans at roughly R100 a ticket.

When the train pulls in quietly and smoothly, Van der Merwe steps off the platform and into the blue and gold passenger carrier with a top speed of 160 km/h – a relatively pedestrian speed compared with some other rail links worldwide, but the fastest ever experienced in South Africa.

A civil engineer by training, he has waited a long time to do this. In fact, Van der Merwe first started talking publicly about the project to link Tshwane, Johannesburg and OR Tambo International Airport by rail in 2000. Back then, he was 51, and the head of the Gauteng Transport and Public Works Department.

Even then his dictum, as he spoke about the project, was “pure magic”, as it remains today every time he delivers a presentation on the subject.

In 2000, when the project was still simmer- ing in the murky soup of politics and public funding, it was estimated to cost R4-billion, and to carry around 70 000 people a day. Back then, it was thought possible for the train to be operational by 2006.

Today – following a two-horse bidding process, route deviations, an extended tunnel (moving up from the initial 8 km to 15 km), gaining National Treasury approval for the public–private project (PPP), the process of procuring and expropriating land, obtaining environmental approval and securing financing – the outcome is a R25,4-billion project with the potential to carry more than a 100 000 passengers a day. Both phases, the first being the airport link and the second the Tshwane–Johannesburg link, are to be completed by 2011.

Riding the Gautrain

The scurry of people tiling the platforms and providing finishing touches to the station aside, Johannesburg’s OR Tambo International Airport station could be in London or Paris – only aboveground and without the cold air drifting in from the tunnels.

The train looks modern and sleek. It moves steadily and sturdily around the bends and through the tunnels, even at its maximum speed.

The seats on the spacious trains used on the airport link are more comfortable than on the commuter-orientated trains to ply the Tshwane–Johannesburg route. However, they are comfortable enough for the 38 minutes the train journey will take between the two cities.

For Van der Merwe to reach the airport from the flagship Sandton station took just under 14 minutes.

En route, the driver, 31-year-old Sipihwe Khumalo, shows how effortlessly the train can reach its maximum speed.

He was unemployed before but showed sufficient skills, such as in mathematics and English, to secure a job as one of 48 Gautrain drivers.

Training takes place over a 50-day period.

Sitting inside the air-conditioned train and travelling along the viaducts on the way to the elevated OR Tambo station, over the congealed traffic below, provides exactly the feeling of relief and relaxation Van der Merwe has been punting vigorously since he first spoke about the Gautrain project.

No traffic. No road rage. No-one skipping and jumping lanes as if they are playing hopscotch.

Should the Gautrain prove as popular as Van der Merwe hopes, there will no doubt one day be some elbow-jostling aboard, but still no traffic jams.

At the other end of the train journey, there will be buses available to transport commuters on dedicated routes around the station, completing the journey from point to point.

For security-conscious South Africans there are around 700 closed-circuit television cameras looking after commuters, says Van der Merwe. Thermal imaging will track activities in the tunnels and at night.

For those wary of Eskom supply reliability, power will be sourced from three different substations, which should mean the system will remain operational during load-shedding, says Van der Merwe.

There are no bathrooms on the train, but all conveniences will be available at the station, including the morning paper and maybe a cup of coffee. Food and drink are, however, strictly forbidden on the train.

The focus is on moving people quickly in and out of the trains and the stations.

The Sandton station is the flagship stop along the airport link, and is located 45 m below ground, with trains pulling in at three levels from various directions.

Claims and Contracts

Van der Merwe says the R4-billion was an initial project guesstimate, which was then pushed up to R7-billion in 2002 by the then Gauteng Finance MEC, Jabu Moleketi.

“We all considered the project and decided we had to make an estimate to work with, so, after the feasibility study, we said it would be around R7-billion in 2002 terms.”

However, then came the bids, punctuated by a subsequent commodities, property and construction boom, and prices for every- thing, from consulting fees to concrete, skyrocketed.

Also, Treasury had a rather nasty surprise in store for the Gauteng government, noting that public transport, in this case, was indeed subject to Vat.

Also, the then Finance Minister, Trevor Manual, calculated in 2005 that government’s financial liability on the project going forward would be R21-billion.

He presented a forward-looking figure, rather than the R7-billion which focused on present project value in 2002, said Van der Merwe.

Manuel’s figure is the number which still remains as the national and provincial governments’ exposure to the project, with the remaining costs to be borne by Bombela, the consortium responsible for building the project, and which will also operate the system for 15 years.

Since the signing of the contract, this official number has remained largely stable.

However, persistent rumours have it that the price tag may be higher.

It appears there are two reasons for this, one being project escalation, and the other reports that Bombela will lodge cost claims against the Gauteng government.

As for project escalation, Van der Merwe says the contract allows for price increases in four instances.

The one is rising inflation, as South Africans have witnessed during the recession, with project planning allowing for a range equal to that of the Reserve Bank’s target of 3% to 6%, which was well and truly breached in 2009.

A weakening rand may also influence the price tag, as 23% of the contract between Bombela and the province is priced in foreign currency. This has, indeed, happened.

Already the price tag has increased R400-million on the back of these factors, to reach R25,4-billion.

The third factor has not been in play, namely a change in route for the train, with the fourth, claims from the contractor, now possibly entering the arena.

Late Handover of Land

In fact, the biggest threat of cost escalations comes from claims Bombela has instituted against the province regarding, for example, what it says is the late handover of land.

The provincial government was to hand over 1 400 parcels of land at designated periods. Bombela says this was done late, making construction difficult.
At some point, the consortium moved the first phase completion date out to September 2010 from the contracted end of July 2009. (Only after long negotiations will the airport link now be ready for the World Cup kick-off on June 11, even if on a smaller scale, with some parking areas not completed, for example.)

Van der Merwe says the Gautrain PPP has a structure that allows for conflict resolution and arbitration. The claim will follow this route.

The claim is purported to be a whopping R10-billion.

Murray & Roberts boss Brian Bruce indicated earlier this year that Bombela was indeed pursuing what he called contractual entitlements.

However, he did not want to provide a number.

Bruce also noted that it was unlikely that Bombela would succeed in its entire claim.

“We’ll take a small percentage. Over the decades, it has been shown that you will never take more than an average of 35% as a contractor.”

Murray & Roberts forms part of the Bombela consortium.

Van der Merwe says the Gauteng province indeed received a so-called ‘delay and disruption submission’ from Bombela in August 2009.

However, the provincial government believes the consortium has not established any entitlement in terms of the concession agreement.

The province then requested the concessionaire to clarify the basis of its entitle- ment in terms of the concession agreement but, to date, it has not responded.

The Gauteng province believes the claim will have “very little chance of succeeding”. “A decision, taken by the Gautrain political committee and supported by the GMA board, is to oppose this spurious claim. Should the concessionaire proceed with this claim, it will be referred to arbitration for adjudication.”

Van der Merwe says he does not know the exact value of the claim, only that it is big.

However, he also points out that R10-billion is a huge number when considering that the entire civil joint venture contract is R12-billion.

“We will obviously look out for our shareholder, which is the taxpayer.”

Ridership and Tickets

The most recent ridership study for the Gautrain was done in 2006, and indicated that there would be 135 000 passenger trips a day on the completed system.

However, says Van der Merwe, a new study completed this year indicates that potential ridership has increased to 165 000 passenger trips a day.

This number does not include some big-stick economics that could see commuters use the Gautrain as an alternative to 50c-plus-a-kilo- metre toll fees to be instituted on Gauteng highways in 2011.

Van der Merwe says ticket prices will be designed to be more affordable than private vehicle use, and even cheaper for long-term customers.

Final ticket prices are still being determined.

“We have enough capacity for the new number,” says Van der Merwe. “The nice thing about a rail system is that you simply make the trains longer to grow capacity.”

It is planned that peak hour trains will make use of eight wagons, with four the off-peak number.

The length of the platforms influence capacity most, with Gautrain platforms able to accommodate 12 wagons.

Van der Merwe is realistic about passenger numbers, though, as much as he is pleased about the new ridership study.

“We will have to wait for about two years to see if it is simply a new thing, or if the numbers are real.”

Indeed, such caution is not out of place, particularly given that international rail projects are prone to throwing up some nasty surprises.

However, history also proved to be unkind, if not more so, to other public transport projects in South Africa.

Lamentable Lessons

Addressing the European Federation of Railways Trackworks Contractors in 2005, the then vice-president of the European Investment Bank, Wolfgang Roth, said that real passenger numbers on rail projects always turn out to be 39% lower on average than forecast, and the ramp-up period slower than anticipated.

(That said, though, well-established metro train systems in Paris, London and Tokyo can not keep up with demand, especially during peak hours.)

Also, the construction costs of railway projects are on average 40% higher than forecast.

One example is Korea, which, in 2004, became the fifth country in the world to own and operate a high-speed railway called Korea Train eXpress (KTX).

Numerous uncertainties and challenges during planning and managing phases resulted in schedule delays and cost overruns.

An analysis discovered five major causes for the KTX project delay. These were the lack of the owner’s abilities and strategies to manage high-tech-orientated megaprojects; frequent changes of routes triggered by conflicts between public agencies and growing

public resistance stemming from environ- mental concerns; an inappropriate project delivery system; a lack of a proper scheduling tool tailored for such a linear megaproject; and the redesign and change-orders made to main structures and tunnels.

Moving back to South Africa, a drive by government to expand public transport in general in the country has not been extremely successful, so much so that the Gautrain PPP claims – warts and all – for the time being, appear to be a more elegant solution for at least starting operations prior to the date con- tractually demanded.

Consider, for example, Johannesburg’s bus rapid transit (BRT) phase one roll-out, which has faced an uphill battle, and which has not yet yielded a verdict of clear success in terms of passenger numbers.

The full phase 1A – 40 km, 48 stations – was meant to be implemented by January this year, but minibus taxi operators’ opposition to the system has seen the Johannesburg council struggle to move beyond the starter route, from Soweto to the inner city, which has been operational since August last year, following delays.

This 25-km, 28-station starter route transports around 16 000 people a day – but phase 1A is envisaged to carry 69 300 people a day once fully operational. Will the system reach this number?

BRT systems in other FIFA World Cup cities have, to date, failed to see the light of day in time for the event.

Government’s project to scrap old minibus taxis and assist owners to buy newer, safer vehicles is not having better luck either.

Transport Minister S’bu Ndebele announced last year that 27 800 taxis of an estimated national fleet of 90 000 had been scrapped and replaced with new vehicles – ten years after Cabinet first approved the taxi recapitalisation project in 1999.

The project was first to cost R4-billion, and is now up at R7,7-billion.

With all this said, what would Jack van der Merwe do differently should he build another Gautrain?

“I would not again be misled by the time it takes to get environmental approval for the project – we all thought the Gautrain would be on the tracks two years ago.”

He adds that he would, however, again make sure he “has the best team possible working on the project”.

He also praises the political commitment the project has received – without which it would have been dead in the water. The Gautrain was never put out to pasture every time the empire’s keys changed hands.

“This project saw five Premiers and eight MECs in total. This shows you that it is a technically sound project,” he muses before stepping onto the platform at the Marlboro station.

 


 

Foot on World Cup Accelerator

Bombela is working around the clock to ensure that the first phase of the Gautrain rapid rail link is operational on June 8, in time for the FIFA World Cup kick-off three days later, says Bombela Concession Company CEO Jerome Govender.

Bombela is responsible for constructing the R25,4-billion project in a 54-month contract, and will also operate the rail system for a 15,5-year period.

Phase one was originally to be completed at the end of July, but after much wrangling between the client - the cash-strapped Gauteng government - and Bombela over additional funding, Bombela made a no-cost proposal to complete a somewhat down-scaled phase one in time for the global sports event.

"We have a deal, and now we are pulling out all the stops to ensure completion. Bombela wanted to have this done for the World Cup," says Govender.

Even though commuters will still enjoy the full experience of a train journey, certain elements will not be 100% complete on June 8, such as all the amenities at the Sandton station.

Phase one runs from OR Tambo International Airport to the Sandton station, stopping at the Rhodesfield and Marlboro stations in between.

"Building Sandton station is a complex project," explains Govender. "It is a difficult site because of the 45-m-deep cavern it fills. It is also a tight, built-up environment with not much room to move around the site. We also have so many activities running in parallel that we have a large number of people on site, which means we have to be extracareful in ensuring everyone's health and safety."

Govender says Bombela is already conducting testing and commissioning of the various individual elements of phase one, and that integrated system testing, or trial running, will start mid-April.

"We have to make sure the entire system is debugged, and that it will operate smoothly."
Bombela will run five four-car trains for the sports event.

Each train will have two slightly more spacious cars that will be for use by Sandton airport passengers, and will only open its doors at these two stations. The other two cars will be for commuters and will allow entry at Sandton, Marlboro and Rhodesfield stations.

Govender says ticket prices for the airport link will be announced before the June service starts.

There will be no "special World Cup price", says Govender. The prices announced prior to the event will be the ticket prices until inflationary pressure demands that they increase. The direct airport-Sandton link will be more expensive than the commuter link.

The full Gautrain system will make use of 125 buses, of which around 40 will be operational for the World Cup.

These buses will operate on dedicated routes, picking up and dropping off passengers around the stations.

World Cup Gautrain users will also already be making use of contactless smart cards to make their payments.

‘Smart' means that a single card can be used to pay for parking at the various stations, for the train journey as well as for the bus ride.

These cards are ‘smart enough' to know if a commuter does not use the Gautrain, but only the parking facility or the bus system, and will charge such a user accordingly, says Govender.

However, train users - or so-called ‘rail users' - will get a discount the wider their system use is spread. In other words, a Gautrain user will pay a discounted rate if he or she also parks and uses the bus within the rapid rail link system.

Commuters who lose there smart cards and who have registered them with Bombela will be able to have their cards blacklisted, and their funds transferred to a new smart card.

It is the aim of the entire Gautrain system to be cashless, says Govender.

Money Matters

Rumours have been rife over the last few weeks that Bombela will file a R10-billion claim with the Gauteng government for what it terms "delays and disruptions" to construction work caused by the provincial authority.

Govender says there is indeed a claim and that a delay and disruption submission has been lodged, but he would not confirm the extent or the value of the claim.

The claim flows from what Govender says was the delayed handover of land to Bombela for Gautrain construction work.
Govender says these claims may be resolved by the members of the public-private partnership (PPP), or the dispute may enter arbitration.

"This is not an unusual process."

He adds that the claim has not soured the entire project.

"Irrespective of the isolated areas of disagreement, the partners' overarching objective is the same: the success of the Gautrain."

Govender notes that Bombela has also thrown money into the pot - R3,5-billion of the R25,4 billion project - and that it would also like to see the system operate to its maximum efficiency.

"That is part of what a PPP is about."

"However, Bombela has an obligation to its shareholders, subcontractors and lenders, and all legal, contractual entitlements must be pursued."

Govender says, in a normal contract situation, it is likely that the contractor would have stopped work on the project because of the dispute.

However, as a partner in the project, Bombela has as much interest as the Gauteng government to see the project succeed.

It also has obligations to its third-party lenders, and is continuing with work.

Balancing Act
Govender says managing all the various Bombela partners and subcontractors can be a tough job.

"Some days, it feels like I have to be Ban Ki-moon and devise a diplomatic solution; and other days, I have to be Attila the Hun and simply get the job done."

Govender is a quantity surveyor by training, with an MSc in urban planning and an MBA from Wits. He was a partner in a surveyor firm and MD of Murray & Roberts Concessions before taking up his current position three years ago.

When phase two is completed in 2011, Govender says he is likely to move on, and maybe then he can spend his Saturdays relaxing, instead of visiting Gautrain sites.

 


 

Edited by: Martin Zhuwakinyu
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