gautrain: urban mobility in a ppp - afdb

Gautrain: Urban Mobility in a PPPWilliam Dachs Gautrain Management Agency

• TABLE OF CONTENTS

1. Realities of Passenger Rail

2. Mainstream Options for Financing

3. Alternative Options for Financing

4. Gautrain Case Study

1st AfDB Transport Forum26-27 Novembre 2015 Abidjan

Realities of Passenger Rail

• South African Quotes from National Rail Policy 2015

• “Un-competitively positioned, ineffectively equipped, operationally inefficient”

• “Unable to compete with road transport”

• “Massive capital investment backlog”

• “Great need for investment funds to increase inherent competiveness”



• Revenue Cost Ratios• Very few operating passenger rail systems generate

revenue/ operating cost ratios > 1

• Most between 0.2 to 0.8

• That means for every 80c of revenue $1 is spent in operating costs!

• Who would invest in passenger rail as a business?



• More people than you would think…• Governments – economic impact and people mobility

• Development Finance Institutions – development impact

• Property developers – positive impact on real estate values and rentals

• Private Sector Operators and Investors – performance based rewards

• Need to use PPPs and mobilize alternative funding sources


Alternative Funding Options

• Land Value Capture • A value-capture mechanism results in a transfer (or “capture”) of

increases in private real estate value generated by public investments back to the public agency responsible for the infrastructure investment

• The public-sector uses the recouped value to cover some of the cost to society of providing the underlying infrastructure. This is equitable because the increased land value flowing from public investment is then shared by the broader public

• Value capture instruments can only be applied to projects where it is reasonable to expect that infrastructure investments will cause significant increases in land value

• Also, the anticipated increase in land value increase must be accurately assessed by the public sector prior to the infrastructure investment


PUBLICPRIVATE

33%

25%17%

17% 8%

Gautrain as a PPP


The Gautrain will promoteEnvironmental Sutainability

SMME & BBBEE DevelopmentTourism

Business development

The project stimulatesEconomic growth

Local & Foreign Investment New development

Job creation

Design toRestructure urban areas

Reduce travel distances, time and cost

Improve city sustainability

More than Just Another Transport Project


Route


Technical specifications

• 80km (15 km in tunnel)

• Track gauge (1435mm)

• Maximum speed: 160 km/h

• 24 modern state of the art trains• Bombardier’s Electrostar

• Different coaches for commuters and air passengers

• 25kV ac overhead electrification

• Frequency every 12 to 30 minutes

• Minimum operating hours 05:30 to 20:30


• Gautrain is a fixed price turn-key project

• Price had been fixed at the signing of the Concession Agreement on 28 September 2006 (TA III approval)

• Provincial contribution R21,9 bn

• Private sector contribution R 3,2 bn

• R25,1 bn is expressed in nominal terms over 54 months

• Current Gautrain revenue exceeds current operating costs (excluding maintenance reserves, capital repayments and overheads)

• Provincial Treasury has committed to a funding envelope that may not be exceeded

Gautrain as a PPP


Gautrain as a PPP


• KPMG Report 2015 finds that…• R20 billion added to provincial GDP in development

• R10 billion invested in new developments and upgrades to retail centers

• Additional investment of R986 million in office space

• Increase in residential property value of R12,9 billion.

• Up to 100% increase in commercial rentals for properties close to stations

• 24,000 fewer cars per day on the roads - time savings and productivity gains

• Lower demand for public funding for road maintenance

• Carbon emissions were reduced

• Densification around stations and the development of retail and commercial opportunities stimulated the economy and municipal rates collection

Economic Impact


Economic Impact in Graphic Form - Sandton 2006


Economic Impact in Graphic Form - Sandton 2015


Funding


Recommendations

• Essentials for Government• Established policy framework for rail investment

• Sound project identification and planning

• Good project management

• Talented and experienced people to work on the projects and programmes

• Sensible and believable business planning with cost and revenue projects that allow for good funding decisions

• Smart market identification and management

• Careful and honest procurement

• No stop –start projects


Recommendations

• Essentials for attracting investment• Land value capture by consensus

• Cooperation between spheres of government

• Sound business case for investment

• Private sector given say in where the investment takes place

• Must lead to increased population densities around stations ie Transit orientated development

• Must get ratio of revenue to costs up• Operating efficiencies?

• Fare evasion?


Thank You

gautrain: urban mobility in a ppp - afdb

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