Date: 02/07/2005
Source: Gauteng Provincial Government
Title: Shilowa: Preferred bidder for Gautrain Rapid Rail Link Project
Announcement of preferred bidder speech by Premier Mbhazima Shilowa
It is with anticipation that I stand in front of you today. Anticipation because we are, by announcing the preferred bidder for the Gautrain Rapid Rail Link Project, today taking a major step in the direction of a new and better Gauteng. In my opening of Legislature speech in February this year I said “All the people of this great province are ready to join hands and put shoulder to the wheel to tackle the challenges that lie ahead and achieve the objectives that we have set to realise our shared vision of a better life for all.”
Last year I indicated that the intention was to announce the Preferred Bidder in November 2004. After the original proposals were received from the bidders, it became clear that the procurement process should be extended to include a Best-and-Final-Offer (BAFO) phase. This was, inter alia, caused by differences in the interpretation of the output specification, the greenfield nature of the project, the requirements arising out of the Environmental Impact Assessment, and the associated risk pricing with particular emphasis on geological conditions and integration.
For a variety of reasons the BAFO process took longer than originally anticipated. It should however be kept in mind that due to the size and importance of the project and its permanence in and influence on the development structure and infrastructure network of Gauteng, it is necessary to be thorough and prudent. Internationally projects of this nature take on average 14 years from inception to completion. When we complete this project just before the Soccer World Cup in 2010 it will be exactly 10 years after I originally announced it in 2000.
The Province has set itself the following key objectives that the Gautrain Project should obtain as part of a larger economic development initiative.
1. To stimulate economic growth, development and job creation
2. To alleviate severe traffic congestion in the Tshwane – Johannesburg corridor
3. To achieve the Province’s goals with SMEs, tourism, BEE, etc.
4. To promote the use of public transport 5. To improve the image of public transport and attract more car users to public transport
6. To promote business tourism through the link between Sandton and JIA
7. To significantly contribute towards urban restructuring, shortening of travel distances and improving city sustainability
8. To provide a link(s) to the Tshwane Ring Rail Project – linking Mamelodi, Atteridgeville, Soshanguve and Mabopane
9. To stimulate the renovation and upliftment of the Johannesburg and Tshwane CBDs
10. To link the main economic nodes in Gauteng with JIA
11. To comprise a holistic transport plan and network for Gauteng
By announcing the preferred bidder for the Gautrain Rapid Rail Link Project, we are as the Gauteng Provincial Government, joining hands with the private sector in the biggest PPP Project ever tackled in the country and indeed in Africa. And we are making a significant contribution to infrastructural development.
The Gautrain project has a number of very important goals. It will provide much needed employment, an estimated 148 000 jobs and will stimulate our economy. It will promote public transport usage and improve its image by providing a safe, reliable and predictable alternative to motor car usage. In turn, it also aims to alleviate the traffic on our already congested roads between Tshwane and Johannesburg.
The project is of such significance that agreement has been reached for the project to receive the support of and co-operation from the National Department of Transport. Transport Minister Jeff Radebe has often emphasised the importance of transport to the national economy and the benefits that the Gautrain will bring, as a flagship public transport project of national significance, to commuters in the highly congested transport corridor between Johannesburg and Tshwane and linking JIA with Sandton and Rosebank.
We have agreed with the National Department of Transport that we should jointly ensure that we use the Gautrain as a catalyst to promote public transport and to ensure that there are high levels of integration with other modes of transport in the province.
I should also remind you that the project has the support of the three metros of Joburg, Ekurhuleni and Tshwane and that the Gautrain is integrated and will be further integrated into their transport plans.
This project is a multi-billion Rand project which cannot be funded in total by Government. It can only be developed as a Public-Private Partnership (PPP). The tender process for a PPP comprises of a Request for Pre-Qualification, Request for Proposal I and II, a Best-and-Final-Offer (BAFO) phase and then negotiations for financial closure and the final signing of the concession contract. All the processes so far were executed in terms of Treasury Regulations 16.4 and 16.5.
I am pleased to announce that we have received the necessary approvals from National Treasury which sets the framework for negotiations with the preferred bidder. Furthermore an affordability limit was set by Treasury Authorisation 1 (TA1).
Apart from contributing to the capital expenditure on the Gautrain Project, the GPG is a crucial partner in this process as it has, according to the Gauteng Transport Infrastructure Act, the power to expropriate properties.
We have made sure from the outset that the Gautrain Project will ensure significant Broad Based Black Economic Empowerment and development of SMMEs including participation by women. Both competing bidders made provision in their contractual entities for Black Empowered Entities. Indeed we as the Gauteng Provincial Government believe that these proposals will become benchmarks for future PPP projects in South Africa. Targets were set and I am delighted to say that in most cases these targets were exceeded.
I would like to share some of these figures with you.
* The target for equity participation was set at 15.3%. The preferred bidder has 25.6% equity participation.
* The target for procurement from BEEs was set at 29%. The preferred bidder procurement from BEEs stands at 41% - a Rand value of R1.3 billion.
* Our target for sub-contracting to BEEs was 32% - the preferred bidder exceeded this target by 10% - a Rand value of R2.8 billion.
* The preferred bidder indicated that R54m will be spent on Social Investment Programmes.
All that remains for me to do now is to announce that the Bombela Consortium has been selected as the preferred bidder for the Gautrain Rapid Rail Link. We are proud to have you aboard! I trust this is a journey that will be beneficial to both the Gauteng Provincial Government and the consortium.
I would also like to thank the Gauliwe Consortium, which now becomes the reserved bidder, for all its efforts.
A special word of thanks to MEC Mashatile, the Chairperson of the Gautrain Political Committee and his fellow members MEC Mahlangu, MEC Jacobs, DG Mogopodi Mokoena and the Project Leader Jack vd Merwe. If it were not for you professional approach and commitment to this Project today would not have been possible.
The Gautrain project is an important and necessary project. Gautrain is a project that will make Gauteng, and indeed, South Africa, proud. I would like to assure you of my Government’s continued support and commitment to the Gautrain Project. Together with the Bombela Consortium we will indeed be turning dreams into reality!
I thank you.
Issued by: Office of the Premier, Gauteng Provincial Government
2 July 2005
Source: Gauteng Provincial Government
Title: Shilowa: Preferred bidder for Gautrain Rapid Rail Link Project
Announcement of preferred bidder speech by Premier Mbhazima Shilowa
It is with anticipation that I stand in front of you today. Anticipation because we are, by announcing the preferred bidder for the Gautrain Rapid Rail Link Project, today taking a major step in the direction of a new and better Gauteng. In my opening of Legislature speech in February this year I said “All the people of this great province are ready to join hands and put shoulder to the wheel to tackle the challenges that lie ahead and achieve the objectives that we have set to realise our shared vision of a better life for all.”
Last year I indicated that the intention was to announce the Preferred Bidder in November 2004. After the original proposals were received from the bidders, it became clear that the procurement process should be extended to include a Best-and-Final-Offer (BAFO) phase. This was, inter alia, caused by differences in the interpretation of the output specification, the greenfield nature of the project, the requirements arising out of the Environmental Impact Assessment, and the associated risk pricing with particular emphasis on geological conditions and integration.
For a variety of reasons the BAFO process took longer than originally anticipated. It should however be kept in mind that due to the size and importance of the project and its permanence in and influence on the development structure and infrastructure network of Gauteng, it is necessary to be thorough and prudent. Internationally projects of this nature take on average 14 years from inception to completion. When we complete this project just before the Soccer World Cup in 2010 it will be exactly 10 years after I originally announced it in 2000.
The Province has set itself the following key objectives that the Gautrain Project should obtain as part of a larger economic development initiative.
1. To stimulate economic growth, development and job creation
2. To alleviate severe traffic congestion in the Tshwane – Johannesburg corridor
3. To achieve the Province’s goals with SMEs, tourism, BEE, etc.
4. To promote the use of public transport 5. To improve the image of public transport and attract more car users to public transport
6. To promote business tourism through the link between Sandton and JIA
7. To significantly contribute towards urban restructuring, shortening of travel distances and improving city sustainability
8. To provide a link(s) to the Tshwane Ring Rail Project – linking Mamelodi, Atteridgeville, Soshanguve and Mabopane
9. To stimulate the renovation and upliftment of the Johannesburg and Tshwane CBDs
10. To link the main economic nodes in Gauteng with JIA
11. To comprise a holistic transport plan and network for Gauteng
By announcing the preferred bidder for the Gautrain Rapid Rail Link Project, we are as the Gauteng Provincial Government, joining hands with the private sector in the biggest PPP Project ever tackled in the country and indeed in Africa. And we are making a significant contribution to infrastructural development.
The Gautrain project has a number of very important goals. It will provide much needed employment, an estimated 148 000 jobs and will stimulate our economy. It will promote public transport usage and improve its image by providing a safe, reliable and predictable alternative to motor car usage. In turn, it also aims to alleviate the traffic on our already congested roads between Tshwane and Johannesburg.
The project is of such significance that agreement has been reached for the project to receive the support of and co-operation from the National Department of Transport. Transport Minister Jeff Radebe has often emphasised the importance of transport to the national economy and the benefits that the Gautrain will bring, as a flagship public transport project of national significance, to commuters in the highly congested transport corridor between Johannesburg and Tshwane and linking JIA with Sandton and Rosebank.
We have agreed with the National Department of Transport that we should jointly ensure that we use the Gautrain as a catalyst to promote public transport and to ensure that there are high levels of integration with other modes of transport in the province.
I should also remind you that the project has the support of the three metros of Joburg, Ekurhuleni and Tshwane and that the Gautrain is integrated and will be further integrated into their transport plans.
This project is a multi-billion Rand project which cannot be funded in total by Government. It can only be developed as a Public-Private Partnership (PPP). The tender process for a PPP comprises of a Request for Pre-Qualification, Request for Proposal I and II, a Best-and-Final-Offer (BAFO) phase and then negotiations for financial closure and the final signing of the concession contract. All the processes so far were executed in terms of Treasury Regulations 16.4 and 16.5.
I am pleased to announce that we have received the necessary approvals from National Treasury which sets the framework for negotiations with the preferred bidder. Furthermore an affordability limit was set by Treasury Authorisation 1 (TA1).
Apart from contributing to the capital expenditure on the Gautrain Project, the GPG is a crucial partner in this process as it has, according to the Gauteng Transport Infrastructure Act, the power to expropriate properties.
We have made sure from the outset that the Gautrain Project will ensure significant Broad Based Black Economic Empowerment and development of SMMEs including participation by women. Both competing bidders made provision in their contractual entities for Black Empowered Entities. Indeed we as the Gauteng Provincial Government believe that these proposals will become benchmarks for future PPP projects in South Africa. Targets were set and I am delighted to say that in most cases these targets were exceeded.
I would like to share some of these figures with you.
* The target for equity participation was set at 15.3%. The preferred bidder has 25.6% equity participation.
* The target for procurement from BEEs was set at 29%. The preferred bidder procurement from BEEs stands at 41% - a Rand value of R1.3 billion.
* Our target for sub-contracting to BEEs was 32% - the preferred bidder exceeded this target by 10% - a Rand value of R2.8 billion.
* The preferred bidder indicated that R54m will be spent on Social Investment Programmes.
All that remains for me to do now is to announce that the Bombela Consortium has been selected as the preferred bidder for the Gautrain Rapid Rail Link. We are proud to have you aboard! I trust this is a journey that will be beneficial to both the Gauteng Provincial Government and the consortium.
I would also like to thank the Gauliwe Consortium, which now becomes the reserved bidder, for all its efforts.
A special word of thanks to MEC Mashatile, the Chairperson of the Gautrain Political Committee and his fellow members MEC Mahlangu, MEC Jacobs, DG Mogopodi Mokoena and the Project Leader Jack vd Merwe. If it were not for you professional approach and commitment to this Project today would not have been possible.
The Gautrain project is an important and necessary project. Gautrain is a project that will make Gauteng, and indeed, South Africa, proud. I would like to assure you of my Government’s continued support and commitment to the Gautrain Project. Together with the Bombela Consortium we will indeed be turning dreams into reality!
I thank you.
Issued by: Office of the Premier, Gauteng Provincial Government
2 July 2005
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