Gautrain prepares for next phase as concession negotiations near completion

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JEREMY MAGGS: The Gautrain has long been held up as one of South Africa’s flagship public-private partnerships (PPP). But as you well know, it’s also faced criticism over its cost to taxpayers, its limited reach, and whether it primarily serves a relatively small group of commuters. With the current concession agreement ending, government has now confirmed the Gautrain is going to continue under a new 15-year public-private partnership, with a preferred bidder already identified.

Read: Gautrain to continue under PPP model as new operator talks advance

The question, of course, is whether the next phase of the project is going to deliver broader value or continue to rely on heavy public support. Let’s put some of those questions to the chief executive officer, Tshepo Kgobe. Tshepo, welcome to you. Gautrain, as I’ve mentioned, often described as a successful PPP, but it has required taxpayer subsidies for years. By what measure should the public judge whether this project has been successful?

TSHEPO KGOBE: Thank you for having me, Jeremy. I think this question has been one that we’ve had to answer numerous times and even on various shows on TV. I had to bring it forward that we did do an economic impact study of what it meant for us to be able to deliver this thing.

The questions that we had asked in the beginning were, can we create a PPP that will deliver on jobs and social investment? Can we deliver on a project that can influence transport choices? Can we reinforce development nodes? Can we integrate the region, so can we have a public transport that interconnects the large three metros?

Yes, we don’t reach all five regions of Gauteng, but the three large metros are interconnected, including connecting you to the airport. Can we then change the perception and attract investment into the province as such?

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On delivering jobs, we didn’t only deliver jobs, we actually delivered better jobs. The report that we did and that we’re redoing now, it’s saying most of the jobs that we’ve created directly on the system are NQF (National Qualifications Framework) Level four and above, and people who wouldn’t have thought about being a train driver or train guard, have certain technical skills, have now acquired those skills through the job, through the process.

If you ask somebody, do you take the Gautrain? Do you take public transport? They say, no, I don’t take public transport. But then you say, do you use the Gautrain? And they say, yes, I use the Gautrain. But then you say, the Gautrain is public transport and they say no, that’s not what it is. So you have to think differently about these things.

JEREMY MAGGS: Let me push you a little bit on regional integration, if I can. The original vision, as I understand it, was to transform public transport in the province. But you’ll concede the system still serves a relatively narrow commuter corridor. Has the Gautrain really delivered on its broader promise of mobility?

TSHEPO KGOBE: We have to look at the statistics first, Jeremy. Seventy percent of all movements – we’ve just done a new integrated transport master plan for the 25 years going into 2050 – 70% of all movement is inter-municipal boundary travel. So people travel from one municipality (into another). People travel from Tshwane into Johannesburg and from Johannesburg into Ekurhuleni, or from Ekurhuleni into both of those other two areas.

From that perspective, yes, we have. Do we have the reach and the network capability that is required on such a system? We’ve just done a benchmark internationally. The systems that do better than ours and that do well have a network effect. They have a reach into the suburbs. What is shown by the simulation we’ve just done now is that congestion now starts in the suburbs, and that’s where our system has its own biggest problem.

How are we addressing that? We are rolling out 22-seater midibuses that are agile and that can go into the various suburbs. We’ve just rolled out four routes here in Midrand.

We’ve rolled out an additional four routes in Pretoria East. We are rolling out in Pretoria West, in the Forest Hill and Thatchfield areas, and we are now rolling out into the northern end and then also unlocking the south. So people who get stuck on that Crown Interchange will then now be able to travel into Park Station with those services. The extension of the Gautrain is important.

JEREMY MAGGS: I understand the argument, but your critics still say that the Gautrain remains a premium service for middle and upper income commuters, rather than a mass public transport solution. Do you accept that criticism?

TSHEPO KGOBE: We’ve accepted that, and hence that’s why we’ve (introduced) the product, KlevaMova, where we’ve discounted our services by 50%. That is unheard of on any service globally, where somebody has discounted their prices and slashed it by 50%.

We said, if you earn less than R350 000 per family per annum, you are entitled to travel for 50% on the Gautrain. We’ve accepted that and, Jeremy, from the first time I met with you, I said to you, we will remain an aspirational product, but we must make sure that we become inclusive.

Read: Gautrain’s ‘Kleva’ move to ease travel costs for low-income passengers

JEREMY MAGGS: All right, let’s talk money, if we can. You say the initial project costs will now be fully paid off. Can you commit to saying that taxpayers will finally see the subsidy burden fall in the next phase?

TSHEPO KGOBE: I wouldn’t lie to you like that, Jeremy. We need to be able to understand, transport in itself, by its nature, being a social service, it becomes a negative concession. By its nature, government chooses to either apply the user-pays principle in full, where you just simply say, well, the system makes its own money, and the users will then pay for every cent that gets used on the system, or government decides whether or not it will it will subsidise part of that transport service.

In this case, from the initial pricing that was given by the current concessionaire, government chose to discount the prices themselves, and in turn chose to subsidise the whole thing.

The subsidy will not be as big as it was because we were paying off an asset, but it will be directed to subsidise the traveller on the system. I can furnish you with five systems around the world that we benchmark ourselves against, to be able to answer this particular question, all of them are still subsidised by government in full.

JEREMY MAGGS: All right. Let’s talk about your future. A preferred bidder for the new concession has been identified. Yet as far as I can see, the public has not seen much detail. I want to know why there’s been so little transparency around who’s going to operate the system, and perhaps more importantly, under what financial terms.

TSHEPO KGOBE: It’s not a transparency issue, Jeremy, it’s a governance issue. As part of the board or the entity itself, in our entity, the two things are separated out. Procurement is dealt with at an operational level. Ours is an adjudication level decision, at this point in time, an adjudication has been done and has been completed, and we’re in the middle of the final negotiations.

If the negotiations fall over at this point in time, Jeremy, and you’ve made an announcement that this is the person who’s going to be running the system, what happens then? Then you find yourself backtracking.

We are looking at being able to say, Gauteng, we have concluded, and this is the person who is going to be running the system. We are not far from the announcement. We are just making sure that everything is kept tightly under lock and key so that there is not any form of influence that can enter that process.

JEREMY MAGGS: Thank you very much indeed, the chief executive officer of Gautrain, Tshepo Kgobe, appreciate your time.

Listen/read: Fixing congestion or wasting billions? Gautrain CEO responds to critics