The Gauteng Provincial Government and the Bombela Concession Company to settle all Gautrain development period disputes

18 November 2016

We are pleased to announce that the Gauteng Provincial Government, represented by the Gautrain Management Agency (GMA), and the Bombela Concession Company (Pty) Ltd (Bombela) have agreed to a comprehensive settlement of all disputes relating to the construction of the Gautrain Rapid Rail Link system (Gautrain).

The mutually agreed settlement brings to an end protracted, costly and multiple legal and arbitration processes between the GMA and Bombela.  The settlement agreement includes the following significant disputes:

• Sandton Station cavern;

• John Vorster and Jean Avenues cantilever bridges in Centurion; and

• Water ingress in the tunnel between Park and Rosebank Stations

• the Delay and Disruption claim.

In terms of the agreement, the Gauteng Provincial Government will pay Bombela an amount of R980 million and a payment over two years of a capped amount of R294 million. This is in full and final settlement of all construction-related disputes between the GMA and BCC.

Gauteng MEC for Roads and Transport, Dr Ismail Vadi, said “due to the time and extent of the costs involved in legal proceedings, as well as the uncertain outcomes of these protracted processes, the parties have agreed to this comprehensive settlement of the disputes. This is akin to an amicable, all-inclusive out of court settlement of lengthy contractual disputes.”

Bombela Chairman, Henry Laas, welcomed the agreement saying “that he believes the settlement is in the best interest of all stakeholders.  It is expected that all legal and financial processes be finalised by mid December 2016.”

Gautrain is a world-class public transport rail system that has since its inception in June 2010 increased passenger ridership by 26 percent year-on-year. Presently, 1.4 million passengers use the train on a monthly basis. GMA CEO, Jack van der Merwe, said that the increased ridership on Gautrain indicates that commuters are making a conscious shift from private car use to public transport.

He added that Gautrain has achieved significant economic, social and environmental benefits for the province over time, which includes the following:

• R47 billion estimated total value added to the Gauteng economy

• 34 800 directly created jobs during construction

• 87 000 indirectly created and induced jobs during construction

• 245 000 jobs created by property developments induced by the Gautrain

• 52 percent reduction in the carbon footprint of Gautrain users who used to commute by car

• 24 200 fewer car journeys a day in 2014 due to the Gautrain

• 12 working days saved a year by the typical Gautrain commuter

• Commuter time saving as Gautrain is eight times faster than road travel in peak hour traffic.

Vadi also confirmed that Gautrain services will be improved over the next two years with the acquisition of 12 new trains sets and related signaling and maintenance asset enhancements. “The legal settlement allows the GMA to focus on planning future improvements to the public transport system in Gauteng and paves the way for future investors in the system” said Vadi.

The GMA has concluded the feasibility study on an expanded rapid rail network in the province, which will released shortly.

Issued by:

Dr Ismail Vadi
Gauteng MEC Roads and Transport        

Contact persons:

Dr. Barbara Jensen
Senior Executive Manager Communication and Marketing, GMA
barbaraj@gautrain.co.za
0836004862

Ms.  Kesagee Nayager
Marketing and Communication Executive, BCC
Kesagee.nayager@bombela.com 
060 992 5149 

Notes to the Editor

Gautrain is one of the largest Public-Private-Partnership Projects launched in South Africa and is envisioned to become the central hub of an integrated public transport system in Gauteng. Gautrain presented the Gauteng Provincial Government with an opportunity to empower its citizens and to expand and grow the long term economy of the province.  The Concession Agreement signed between the GPG and BCC includes a 15-year operating and maintenance period after construction, which period will come to an end in March 2026.

Bombela, as the Concessionaire, has contracted various sub-contractors to develop and operate the Gautrain system.  One such sub-contractor is the Bombela Civil Joint Venture (Pty) Ltd (“BCJV”), which was responsible for the design and construction of the entire Gautrain system. Murray & Roberts (45%), Bouygues (45%) and Strategic Partners Group (10%) are the shareholders of BCJV.  The GMA, a fully owned Provincial Schedule 3C public entity, was established by the Gauteng Provincial Government to manage, co-ordinate and oversee the Gautrain Project.

Claims background

• The Water Ingress claim – The Gautrain tunnel, as a drained tunnel, had to be built to meet the Concessionaire’s stringent water inflow specifications. On completion, the water ingress was found to be in excess of the contract specification, which led to a dispute between the Parties. In November 2013 the arbitration panel of the Arbitration Foundation of Southern Africa (AFSA) ruled in favour of Gauteng Provincial Government (GPG).

• Sandton Station ‘cavern’ claim – This claim by BCJV, relating to the cost of construction of the station utilising a construction methodology different to the tendered methodology, was ruled in favour of BCJV by AFSA.

• The John Vorster and Jean Avenues cantilever bridges claim – This claim by BCJV is for additional costs incurred following a design change to the bridges over John Vorster and Jean Avenues in Centurion. This claim, on its merits, was ruled in favour of BCJV and the quantum hearing was scheduled to start in October 2016.

• Delay and Disruption claim – This is a complex claim and entails over 140 individual claims. The Delay and Disruption claim by BCJV relates to the late handover of land for construction purposes. Due to the complexity of the claim, the initial arbitration hearings were focused on addressing the legal interpretation of various clauses in the Gautrain Concession Agreement. The Delay and Disruption claim, merit and quantum is scheduled to be heard in 2017 and 2018.

Gautrain website:          www.gautrain.co.za

Call Centre :                  0800 42887246

SMS alert line:               3269

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