Empowered group keen to see Gautrain run by South Africans from 2026

20th September 2023 By: Martin Creamer - Creamer Media Editor

Empowered group keen to see Gautrain run by South Africans from 2026

The Gautrain fleet.

The Strategic Partners Group (SPG) is the empowerment partner in the Gautrain, the rapid rail link owned by the Gauteng provincial government and run by the Bombela Concession Company (BCC).

When the current concession expires in 2026 will SPG continue to be a Gautrain participant, is the question that Engineering News put to SPG executive chairperson Mzolisi Diliza, who is also well remembered as the former CE of the then Chamber of Mines, which is now Minerals Council South Africa.

The Gautrain has been a significant component of SPG’s business profile since the start of operations in 2012 as a viable black economic empowerment entity and is vigorously committed to extending its Gautrain involvement beyond the 2026 termination of the existing concession.

However, SPG’s continued role as a Gautrain partner is not a foregone conclusion.

It has been made clear that the appointment of the organisations to maintain, upgrade and modernise the Gautrain, for what will probably be a 15-year extended period, will be subject to a tender process and Diliza made it very clear in his Zoom interview with Engineering News that SPG will definitely enter the tender process, which will most likely be conducted under the jurisdiction of the Gauteng MEC for Transport and Logistics. (Also watch attached Creamer Media video.)

SPG was formed in 2002 when Diliza, its founder, was on the lookout for investment opportunities that demanded the participation of a wholly owned black South African business entity and which would create value for the shareholders who had come on board.

SPG went to the market and raised the investment capital required from several financial institutions. The loans that were granted have subsequently been repaid.

Two South African companies – SPG and Murray and Roberts (M&R) – were signatories to the original Gautrain construction agreement.

British company Bombardier, a manufacturer of transportation equipment, and Bouygues a similar French manufacturing company, also signed and RATP-Dev, a French specialist high-speed rail transportation operator was involved on the periphery. RATP-Dev was subsequently absorbed into the Bombela Operating Company (BOC) from where it manages and supervises the operational needs of the Gautrain.

Of the four companies that signed the original Gautrain agreement, SPG is the only one that remains an active Gautrain participant.

In its current figuration, the Gautrain system is managed and controlled by the Gauteng provincial government, BCC, and operated by BOC. SPG has shareholdings of more than 35% in each of these organisations and a substantial portion of SPG’s revenue is received in shareholder dividends paid by BCC and BOC.

Apart from dividends paid to shareholders, SPG also derives additional benefits from its Gautrain involvement.

At the time that the agreement was signed by the four startup entities, SPG, unlike the other three signatories which were well established global business organisations, was a commercial entity in a state of early growth and development.

As a result, Bombardier, Bouygues and M&R made commitments to a protocol agreement aimed at promoting revenue-enhancement opportunities for SPG in the supply of goods and services which would be subject to agreement on pricing, timing and capacity to deliver.

The Gautrain revenue enhancement opportunities offered to SPG were in advertising and kiosks; the commercial information and communication technology network; the fibre network; rail station WiFi; cleaning and maintenance services and, security services.

Virtually all of these operational opportunities have been exploited by SPG with security, cleaning and maintenance services provided at various Gautrain stations.

Gautrain advertising is a particularly active area of business with SPG having established a profitable joint venture with JCDecaux, a global outdoor advertising agency.

Many of South Africa’s major companies, particularly in the finance and banking sectors regard the Gautrain stations as attractive advertising venues.

In addition, in 2019 SPG acquired a majority shareholding in Optinet Systems, an engineering company, that performs a variety of specialised functions within the Gautrain reserve. Optinet is engaged in Gautrain WiFi and cellular projects, as well as a major venture to install new Gautrain fare gates.

SPG is thus eagerly awaiting the distribution of the request for tenders for the next phase of the Gautrain operation to come into effect when the current Concession comes to an end in March 2026.

Diliza is convinced that the experience the company has been able to gather during the existing concession will put it in a favourable position to add value to the ongoing successful operation of the Gautrain.

Circumstances permitting, SPG would seek to cooperate in the management and operation of the system with RAPT-Dev and any other organisation with the capacity to enhance the performance of what continues to present a world-class transportation facility to both domestic and international travellers.

An ultimate objective is to reach a stage where there are sufficient skills developed for the entire Gautrain network to be managed and operated by South Africans.