Full Steam Ahead

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The Bombela Consortium recently announced it had finalised negotiations with Rand Merchant Bank and Standard Bank of South Africa Limited to fund its $430m commitment to the Gautrain project. This ends eighteen months of negotiations since the consortium won the project contract, as well as four months of further negotiations between Bombela and the two banks.

Work on the South African Gautrain rapid rail link, with an estimated cost of $3.5bn, is now underway. The 10-station, 80km project, the largest one of its kind in the world, is intended to reduce traffic congestion in Gauteng province. It will run from central Johannesburg to Pretoria, where it will link with the existing rail network. The East-West portion of the line will go to the OR Tambo International Airport.

The South African government will contribute $3.07bn to the construction while an additional $491m will be provided by private sector contributions, making this the largest public-private venture ever undertaken in South Africa.

The consortium, which includes the Canadian company Bombardier, the world's biggest manufacturer of trains, French civil contractor Bouygues Travaux Publics, RATP International, the operator of the metro and commuter railways in Paris, South African civil contractor Murray & Roberts and the South African Strategic Partners Group, holds the contract to complete the construction of this intricate rail system.

The first link of the railway, which will connect Johannesburg to the airport, is expected to take approximately 45 months to complete with a target end date of June 2010. This coincides with the commencement of the World Cup. However, project leader, Jack van der Merwe, said the project would not be rushed to be ready in time for the tournament.

The entire project is scheduled to be completed by March 2011 at which time the train is expected to take commuters from Johannesburg to Pretoria in under 40 minutes. The train's air passenger service will take travels from the Sandton station in Johannesburg to the airport in 15 minutes.

It is hoped the new rail line will ease daily commuting traffic as traffic volumes in the Gauteng province are growing at over 7% per year compared to the rest of South Africa, which has average increases of 3% per year. In addition to removing an estimated 300,000 cars per day from the roads between Gauteng's two largest cities, the overall operation is expected to create an estimated 100,000 jobs and further stimulate the economy.

In a survey conducted by the international research firm, Synovate, 81% of respondents traveling by taxi between Pretoria and Johannesburg indicated they would be likely to use the train, while 57% of those interviewed reported they believed their journey would be quicker on the new rail line. On average, commuters believed they would save between 21 and 30 minutes on each trip between the two cities.

Complaints have surfaced in the local media that many South Africans believe the train will be too expensive for the average citizen to use. However, minister of transport, Jeff Radebe, said "This is not about elite public transport... it is about creating a mass transit system that caters for workers and business people, civil servants and scholars, shoppers and leisure seekers to get them where they want to be - safely, securely and affordably."

Commercial property development in and around the railway's 10 stations does not fall within the scope of Bombela Consortium's contract. As such, construction has spurred major independent development projects in and around Johannesburg. One of the largest will take place in Johannesburg's Rosebank district, where Old Mutual Properties has allocated $87.5m to build a new complex consisting of a hotel, shops and offices.

To ensure the approximate 1000 benchmarks set by the provincial and federal governments are met, transport civil engineering company Arup South Africa was recently awarded a $21m contract. It is expected to monitor the project's progress for the next five years and make certain the project is done within budget. Cost estimates have risen several times since the original 2002 estimate of $983m.

Van der Merwe told OBG that the main causes of the cost hikes were an environmental impact assessment that caused planners to change routes and shifts in the scope of the tender due to delayed construction.

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