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Mar 20, 2008

Gautrain agency dismisses claims that project's costs surged to R35bn

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The Gautrain management agency, on Thursday issued a response to issues raised by African National Congress MP and South African Communist Party deputy general secretary Jeremy Cronin in Parliament on Tuesday, which indicated that the costs of the rapid-rail project were spiralling beyond the R20-billion mark, and heading towards R35-billion.

"The Gautrain Project would like to reiterate that the total cost of R25,2-billion for Gautrain's public private-partnership contract, as approved by National Treasury on 26 September 2006, is a fixed price, fixed scope and fixed period contract," Gautrain management agency CEO Jack van der Merwe said.

He added that the price could only increase if the consumer price index increased above the level, as predicted by the Reserve Bank - Government would then be responsible for the difference, or if a claim by the Gautrain Concession Company, Bombela, if they deemed the Gauteng Province to be in breech of the contract as per the Concession Agreement, or if the Gauteng Province decided to extend the route and/or build more stations - this would then be done through a variation order.

"None of the above has happened and at this point in time, the project is within budget and there are no indications that the cost will escalate to R35-billion as stated by Cronin," concluded van der Merwe.

In addition to questioning the costs of the project, news service Sapa quoted Cronin as having said that strategically ill-conceived infrastructure programmes could "crowd out and undermine other possibilities, among others, by drawing off scarce engineering, artisanal and project management skills from government departments, parastatals, and municipalities, and by driving up the prices of cement and steel and even threatening the availability of these key inputs," he said in parliament.

"Further, by making inappropriate technical choices, for example, in the case of the Gautrain, the train sets, the electrical components were all being largely imported, and because it was a stand-alone and once-off system, it meant there would be little medium-term and longer-term manufacturing spin-offs for future transport projects. How do we align our infrastructure investments with our industrial policy objectives?" Cronin questioned.

He suggested that for better alignment, "something like a council of state, which existed in a number of developing countries", should be considered and could be a "super-cabinet with a strategic planning mandate, and with key overarching portfolios like infrastructure, energy, human resources, social development, public safety, trade, industrial policy, foreign affairs, and the treasury."

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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