You can also listen to this podcast on iono.fm here.
CONTINUE READING BELOW
JEREMY MAGGS: Alright, let’s move from trade to transport. The Gauteng Management Agency says it’s finalising an expansion project, which will see its rail network almost triple in size. The question of course, is where’s the money going to come from and how long will this expansion project take?
From the agency, I’m joined now by Tshepo Kgobe, who is the Gauteng Management Agency chief executive officer designate. Tshepo, a very warm welcome. Why the need for the expansion then?
TSHEPO KGOBE: We have to be able to understand one thing. We are a province that functions with its mobility. If you’ve got a province that is non-functional in terms of mobility, so let me give you the statistics that comes from the modeling that we did. So the modeling that we did shows that in 2025, the freeway speed in the whole of the province will grind down to 26 kilometres an hour. It’s currently hovering in and around between 40 to 35 kilometres an hour. In 2025, it does that.
Then in 2037 what happens is that it goes down to 10 kilometres an hour. Now that is a non-functional province that will not be able to move its people and move goods and services around the whole of the province. Now having that understanding, you also have to understand that in 2050, 70% of the world’s population will live in cities.
So now you have this congested, small land mass with no freeways. But in addition to that, remember before we ended up with the e-toll saga, we were going to build Gauteng Freeway Improvement one, which is what is done now that we did during 2010, we were going to do Gauteng Freeway Improvement two, which would’ve added more freeways, and do Gauteng Improvement three.
Now with those projects on hold because there’s no funding for them, then it means you need to have an alternative for moving people.
But it’s a policy decision that we made a few years back that rail will become the backbone of public transport in the whole of the province and that in itself becomes a big issue.
But subsequent to that, I think it was two or three years back, we then spoke about our Special Economic Zones [SEZs], which there are seven of them, I think three in the north, two in the west end, and then one in the south, and then two in the eastern side. Now with that, you need to have an efficient way of moving both the people who are knowledge workers and labour from the central core to the outside of that central core where the SEZs are going to be located. Because we decided in 2013 that we will not build outside of the urban core and the urban core is the current central strip, and rather we would densify the urban core more than anything else and we’ll preserve our green areas in Gauteng.
JEREMY MAGGS: Okay, that’s a very detailed explanation. Are you able at this point to provide an estimated total cost for the expansion project?
TSHEPO KGOBE: Not at the current moment, Jeremy. We had a number in 2017, but we’re in the middle of updating that number for it to be approved by the national government.
JEREMY MAGGS: This is not set in stone yet. You’re still waiting to raise the money before you can start moving?
TSHEPO KGOBE: We will move. We’ve been having a conversation that there are very few projects that are shovel-ready at this point in time of that magnitude and size. If you are going to jumpstart the economy of a country, you would need a key critical project like ours to actually move with it. We are just waiting for the approval as per the Treasury approval one, which is required by Regulation 16 of the PFMA [Public Finance Management Act], which regulates all PPPs [public-private partnerships].
So that is the only thing that we are waiting for. We have been informed that there are no challenges with our submission. The only thing is that it has been sitting for too long and therefore we need to update the numbers within it.
JEREMY MAGGS: The challenge, of course, will be in the future to make sure that the right measures are taken to ensure that the expansion project remains on schedule and within budget.
TSHEPO KGOBE: Yes, that is an important part. So one of the key things that you might be aware or not be aware of is that I’ve been spending a lot of time doing stakeholder engagements, engaging communities that are worried about the destruction of their neighbourhoods and what will happen to their neighbourhoods.
CONTINUE READING BELOW
So it is a pre-emptive step for us to be able to make sure that we engage these communities upfront, so that we do not end up with the 2005, 2006 saga of when we built the Gautrain the first time. We have communities behind the project themselves and we actually listen to the challenges that will come up if we build a line at grade, which means on the ground, and if we build underground what does it mean, if we build on viaducts what would it do in creating … in various communities.
So that is work that we’re doing upfront. It is not required by the current stage of the work that we’re doing, but we have taken that as a step to be able to fast track the project.
JEREMY MAGGS: Do you have a projected timeline for the completion of this expansion, and have you set any milestones yet?
TSHEPO KGOBE: Yes, so for phase one, we’re looking at five and a half years, two years of us sorting out the detailed design because now a lot of the areas in the south, phase one is the Soweto line, which goes to Jabulani, and that in itself, because we have a lot of settlements that have been developed post-2017 and us determining the route, a lot of that line is going to end up in tunnel, and because it’s going to end up in tunnel, it will take a little longer than what we had anticipated itself.
We are busy with the process of redesigning the line to be able to make sure that any severance of communities and any destruction of current neighbourhoods is mitigated, and we actually move the line underground.
It will become a little bit more expensive than we had planned for, but it is a part of us being a responsible citizen to not destruct communities.
JEREMY MAGGS: Just a final question then. The service as it exists right now, is it being effectively utilised and is it profitable?
TSHEPO KGOBE: It is being effectively utilised. And when you talk about services like ours, you always have to check one important thing. Transport is what we call a negative concession. So there is always a subsidy that gets paid in, but the measure that is used by the World Bank of whether or not services like ours are reflective and are working is whether or not you can pay your operating costs.
At the current moment, we are able to fully fund the operating costs from the fare box and that is a good measure.
At some point in time, we’re actually at 110% of the required profitability of the system in terms of it being able to pay its day-to-day operational costs. But as years have gone, those margins have been eroded.
As you know, we’ve only normally just raised our prices with CPI [consumer price index] and that has been eroded to a great degree. But we are happy with it; it is being used. Yes, we haven’t reached the great numbers that we had before the pandemic. We are a recovering service, and globally it has been shown that rail transport lags behind by 30 to 40% from other modes of transport.
JEREMY MAGGS: I’m going to leave it there. Tshepo Kgobe, thank you very much indeed.
Murray & Roberts completes R1.26bn disposal of Gautrain operator stake
Survey reveals massive decline in rail passengers over the last 10 years
Gautrain bosses bombarded with complaints, questions on proposed route expansion