This week we have seen two interesting reasons why the information bill, in its current form, needed amending. We learned of South African sniper weapons in Libya, and we have now learned of the many millions Gauteng tax payers will likely fork out for the lack of passengers using the Gautrain.
At the beginning of the week, City Press exposed damning video evidence proving outright that sniper rifles, made in South Africa, are being used in Libya’s bloody civil war by forces loyal to Gaddafi.
You may remember 2oceansvibe began asking these questions back in February already.
Now, a report that appeared in The Star newspaper yesterday has revealed that Gauteng taxpayers could be in for as much as R259 million in “patronage guarantee costs” for the Gautrain project.
And that’s just this financial year. It could be as much as R360 million next year.
Why? Because there may not be enough passengers willing to pay the high ticket prices to use the Gautrain.
This could lead to a shortfall in the Bombela consortium’s operating costs. Not to worry though, because they can be assured of covering these operating costs with the Gauteng government’s promise to do so.
According The Star’s report:
“Yesterday [Monday], the agency would not say how much the full annual guarantee is, but confirmed the R259m quoted was for part of the year.
“We need to, every year, review actual total revenue, adjust forecasts and budget accordingly,” said GMA spokeswoman Dr Barbara Jensen.
She said the guarantee would remain in place “until the actual total revenue equals the minimum required total revenue in terms of the concession agreement”, and that this should happen during Bombela’s 15-year operational period.
Jensen could not say how many passengers would be needed so Gauteng wouldn’t have to pay.
“It is not to cover a potential shortfall of passengers, but rather a mechanism by which the concessionaire can be assured of covering its operating costs (the so-called maximum total revenue).
“In determining the fares, the province had to take into account two factors: (a) affordability of fares; and (b) the unknown period of time for actual ridership to reach forecast levels,” said Jensen.
The patronage cost is part of the department’s annual R2.2 billion budget for the Gautrain for this year. This includes R1.2bn in construction costs, R382m for “operational and support costs” for the GMA, and R89m in loan repayment costs.
Although much of this appears to be operating costs, it is all listed under capital expenditure.
The department’s spending for the next two years on the Gautrain – R2.3bn next year and R2.4bn the year after – is also listed under capital expenditure, although the Gautrain is supposed to be finished this month. This is about a third of the department’s budget each year.
The Gautrain patronage guarantee is referred to in a document produced last year by the World Bank and the Public-Private Infrastructure Advisory Facility on public-private partnerships.
“Roughly speaking, the provincial government will pay the concessionaire the difference between the concessionaire’s actual revenue and a predetermined minimum, if actual revenue is below the minimum. The minimum is an estimate of the revenue the concessionaire needs to cover all its costs, including the cost of capital. It exceeds forecast revenue by some R360m a year,” said the report.
So, Jimmy Manyi, this is why you often find journalists reporting about negative government stories.
This isn’t great news, Jimmy, and the people deserve to know what they are paying for, especially if they had little say on how their money was to be used.
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