Gautrain light rail concession

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On September 28th, 2006, the Gauteng Provincial Government of South Africa and private consortium Bombela signed a 20 year contract for the financing, design, build, operation and maintenance of a light rail system. Construction period was estimated in five years and operational period in 15 years. The project, implemented through a PPP agreement, was planned as a state-of-the-art rapid rail link with around 80 km of railway lines, of which 14 km would be underground, over 200 bridges/viaducts, and 10 stations. The system could be extended in the future. General commuter services were expected to be operated on both the Johannesburg-Tshwane spine and on the link between Sandton and Rhodesfield in Kempton Park. A separate dedicated, purpose-designed train service suited for the specific needs of domestic and international air passengers would be operated between Sandton and Johannesburg International Airport (JIA). About 96 train coaches would be provided to transport the expected more than 130,000 passengers per day that would use the system at opening. The trains was expected to travel at speeds of more than 160 km/h, to meet a required travel time between Johannesburg and Tshwane of about 40 minutes, and 12 minutes between Sandton and JIA. Trains would operate more than 15 hours a day, with reliability, punctuality and predictability being key features of the service. Passenger safety and security were expected to be one of the key features of the system. Bombela consortium was selected as declared preferred bidder in July 2005 after winning a competitive tender. The only other bidder was the Gauliwe consortium. The Bombela consortium was made up of Canadian firm Bombardier Transportation (25%), French company Bouygues Travaux Public (25%), South African consortium Murray & Roberts (25%) and the Strategic Partners Group Concession (25%). The latter was a South African special purpose company for black empowerment, and its inclusion was one of the requirements to qualify for the project tender (a minimum of 15.3% stake in the project company). The total project cost was estimated at R22,293 million (US$3.483 billion). The project was financed through a combination of financing facilities provided by the private sector and contributions from the public sector. Under the PPP agreement, the public sector (national and provincial) committed provide a capital grant of R19,199 million (US$3 billion) over the five year development period in 2005 terms while the private sector committed to provide R3,094 million (US$483 million) in capital funding of which 85% was to be debt raised from the local banking sector. Financing for the project was provided as follows: • $1.5 billion from the South African federal government. • $1.5 billion from the Gauteng Provincial Government. • $410 million in debt financing taken by the Bombela consortium. • $73 million equity. The public sector was also responsible for the land acquisition and the costs of managing and monitoring the agreement by the newly established Gautrain Management Agency. The project reached financial closure n January 25th 2007 when the Investment Development Corporation (IDC) posted a bond covering the Strategic Partners Group Concession's equity participation in the project. Previously, in 2006 the project secured private debt financing for the $410 million from Rand Merchant Bank and Standard Bank. The project was to be built in two stages: phase one linked Sandton, Marlboro, Midrand, Rhodesfield, and Johannesburg International Airport (JIA), and was to be completed in 45 months; phase two included routes to the Park Station, Rosebank, Centurion, Tshwane (Pretoria) and Hatfield stations and was scheduled for completion in 54 months, nine months after the first phase. The Gautrain light rail system was one of the largest private-public greenfield railway projects in the world, with total projected construction costs of almost $3.5 billion. The project was designed a Sponsor update: last 25% owned by SPGC - Strategic Partners Group Concessions, a broad-based empowerment party.