Gautrain partners take multi-million rand hit from drop in demand

Ridership as low as 6 000 a day from 10 times that before the lockdown.
Many are staying home while others are using their cars. Image: Moneyweb

The Gauteng Provincial Government and Bombela Concession Company (BBC) will both take multi-million rand ‘hits’ because of low commuter patronage on the Gautrain caused by the Covid-19 lockdown.

JSE-listed Murray & Roberts (M&R) has a 50% stake in the BCC, which holds the 15-year concession for operating and maintaining the Gautrain.

M&R group investor and media executive Ed Jardim confirmed on Tuesday the group will take a financial hit because of low patronage. He said the BCC carries the risk on actual revenue up to a certain level, and from this level up to the guaranteed level, the revenue gap is covered by the Gautrain Management Agency’s [GMA] ‘patronage guarantee’.

Jardim added that under the lockdown restrictions, ridership is down significantly from pre-lockdown levels “to the extent that actual revenue is below the level from which the patronage guarantee applies.”

“This shortfall between actual revenue and the level from which the patronage guarantee applies is carried by BCC,” he said. “Unfortunately, we are in a closed period and cannot provide any financial detail. Our results are out on August 26, where we will provide detail on this matter.”

However, GMA CEO William Dachs said the province “paid R92 million more than budgeted for the patronage guarantee in the first quarter of the 2020/21 financial year and “Bombela lost approximately R171 million in revenue.”

Dachs said the financial cost of the patronage guarantee for the 2018/2019 financial year was R1.64 billion. The cost of the guarantee for the financial year to March 31 is not yet available.

Provisions?

Dachs was guarded in his comments on whether the GMA has made any provision for the expected increase in the cost for the patronage guarantee in its 2020/21 financial year and, if not, where it will get the money to pay for it.

He said the GMA is engaging with the Provincial Treasury on a revised budget and is monitoring the revenue coming from the system.

Dachs said during a ‘Public Transport in the Time of Covid-19’ interview on CNBC Africa this week that between 55 000 and 60 000 passengers a day normally travel on the Gautrain, but this has declined to between 6 000 and 8 000 people a day “depending on people’s movements on the day”.

“We track our numbers daily and can draw a direct correlation between the [Covid-19] infection rate and usage.

“When infection rates spike, people stop using the trains,” he said.

“People are very responsive to what they perceive as the risk of going out. The weather is also a factor and a cold week impacts on us,” he said.

Dachs said despite the BCC taking the bulk of the Gautrain revenue losses, it is performing “really well” and providing as much of the services as possible without laying off its staff.

He said the Gautrain has been operating for 10 years and from both a government and private sector point of view they are trying to “get through this” and “do another 20 years”.

Read: Gautrain a big policy mistake – CompCom

“It’s that kind of approach. The commitment is there from both parties to make sure that Gautrain survives and comes through this,” he said.

Dachs said the Gautrain would normally have transported about four million people in the period from the end of March up to July 20 but had only transported about 12% of that.

Move back to cars

He said a lot of people have observed the directives given by government and stayed at home, but the GMA also suspects that many people have moved back to using their private cars.

Dachs stressed that using a private car will never be cheaper than the Gautrain, because there are so many hidden costs in private car usage and many of those costs are imposed on other people, such as through accidents and environmental harm.

He agreed the freeways are much less congested and the Gautrain competes on both time and cost compared with a private car.

“For us to be most effective on time, we need congested roads. We are not seeing that at the moment,” he said.

“We have had a look at some of the Sanral [South African National Roads Agency] data. It looks like road usage is up to about 50% to 60% of normal levels. Depending on how long the lockdown lasts and how long people stay at home, we would expect to see road congestion levels go up again in the next four to five months – and we will be working on restoring confidence and getting people back onto public transport, particularly the Gautrain,” he said.

Theft, vandalism

Railway Safety Regulator acting CEO Tshepo Kgare said addressing theft and vandalism is at the heart of restoring confidence in the public transport system, particularly the railways sector, and attracting commuters back onto rail after the lockdown.

Kgare said its statistics show there has been an increase in the last few years in security-related incidents to about 9 000 incidents, and 90% of those were theft and vandalism.

“In the first quarter alone, we have about 1 400 incidents of theft and vandalism within the railway space,” she said.

Dachs said theft and vandalism is “a huge issue” and there were three incidents this past weekend of people coming into the rail reserve and “risking their own life and limb trying to steal signalling cables.”

“A year ago we probably had three a month,” he said.

“If we lose the battle to cable theft now, if we lose the battle to private car usage now, without having a plan to crowd people back into good public transport systems, then Covid-19 will be much more harmful than it should be.

“The challenge for us in the rail industry is to firstly get through Covid-19 and keep people safe. Then secondly it’s to come back stronger with functional, smarter working public transport and rail systems,” he said.

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I really hope the Gautrain comes out well. This is one project where there has been no noise around corruption and other nonsense

Not sure if you entirely correct regarding corruption.

We just dont know what happened in the background to these deals.
I am pretty sure there was some leakage.

Using Walras’s law… if all markets (in this case the market for corruption) but one are in equilibrium, then that last market must also be in equilibrium.

When things were in full swing, this service was awful. Its rush hour capacity was far, far too low. You’d have to wait for 5 or 6 trains in Sandton, so full were they. In the mornings from Pretoria, forget about getting a seat in the grossly overcrowded carriages, even at 5:30. No wonder people went back to cars; the Gautrain was something like root canal. You didn’t do it voluntarily.

Same will most probably happen when restaurants are open again fully with alcohol.

Patrons are not going to return in their numbers as before. Many might still go bust.

Now can someone please explain this to CR and his troop. The quicker they open the better.

For sure the anc can assist gautrain temporary financially, if one look at the corrupt non-tax paying taxi industry who got a nice hand shake assistance from the anc (paid with taxpayer’s money) and the anc’s revival idea of a money sucking “old saa” into a “new saa” – not with own capital generated, but the taxpayer / pensioners money.

It was in a Moneyweb article +/- 20 Feb 2020 where it was mentioned by compcom: “It now recommends that the Gauteng provincial government take over Metro Rail, and integrates it with the Gautrain to run “a single system that doesn’t separate people according to class” – with this highly political smelly idea, gautrain can certainly follow the taxi route and demand assistance from the anc – at least they are still an operating entity, not like the bankrupt s.a.a. – what is metro rail’s standpoint now that is also not just moonlight and roses for that industry???

In Europe people moved from trains and buses to using bikes or walking more. That is a far healthier outcome rather using more cars or taxis.

Europa has civilized organised societies with respect for law and order and short distances. No such things in sunny SA. Only ANC corruption and criminals. You will be mugged or killed on foot and cycle.

Even some African countries use bikes, cycle, walk with better outcome of arriving safe and sound to their destination than SA.
If you are not knocked down by cars or taxis. You will be lucky to arrive where you are going without being mugged or even killed in SA.

I used to walk/cycle to work. It was very nice for the mind. It was a decision to live close to work, and isn’t recommended for most places in SA, but definitely worth it if you can make it work, plus I had more time because it acted as my exercise too instead of gym treadmill/cycle.

In Europe, like almost everywhere except US, it is not normal to work more than 40km away as is the norm in Jhb-Pta

In Europe people that cycle live a lot closer to work, There are no minibus taxis, no disregard for law and order etc, etc., we only have the weather here in SA.

petty crime,violent crime and cable theft…far worse than covid19

it was going downhill already

if the virus one day subsides…..will the ANC government still blame apartheid or the virus for the total collapse of the country ( keep in mind their corrupt activity’s is definitely not the reason )

They did watch this they really did. We have special type of people who are running this country, it’s constant brain farting at best.

Well, the whole idea of C-19 lockdown was to “stay at home”….and damage businesses. Gautrain is no execption.

Obviously the Gautrain figures will be down (with a larger % of people still working from home-office during ‘peak’ infection)

Lived in Gauteng pre-2010. Traffic congestion must be a lot better now in Sandton CBD / Midrand / Randburg / Illovo corridor??

(…yet, you don’t see many commuters on large capacity scooters in this fair-wealther country of ours, like Vespa 300i, Suzuki Burgmans, Yamaha T-Max or even cheaper SYMs…we prefer to ‘fume’ in our cars).

Some of us have already gone that route. Went to 150cc Big Boy Scooter, then Honda CBX250, then BMW G650GS and right now BMW F800GS Adv. Never been dissappointed.

Henry.Honda nc750x is the best.

The NC750X has beaten me on the 650, but its not getting near the Adventurer.

Agree….it’s INCREDIBLE how much time is saved on 2-wheel commuting.

Had a Suzuki Burgman 650, seeing clients in Gauteng (yup from Klerkdorp) three times a year. The 2h long-distance can be a pain at times (not as comfy as a car…but once you hit Gauteng, o boy, what a pleasure!!)

By ‘personal best’ was departing from a client in Faerie Glen, PTA on 12h30 weekday….already late for my next 1pm appointment with next client in DunkeldWest/Hyde Park. Arrived after only 32 minutes, I parked the “big Burger” at destination….helmet/jacket stowed under seat..briefcase out..walking up to client, shaking hands, while still high on the lingering effects of adrenaline *lol*

Not a sportsbike. A scooter!

(…not that speed limit was broken much 😉 More to do with passing miles of cars on off/on-ramps, and set off after every robot in front, and missing car mirrors by inches. Under full control….it was that accurate.

IF I was traveling in a FERRARI 488 I would’ve been late for meeting!

Gautrain Management Agency must heed the advice from elsewhere. Up your ante, w.r.t. synchronizing of your arrival/departure times of trains and busses. It will make a hell of a difference. Also, if you can increase the radii of you bus services from the current 5km from station, to say 7.5km – 10km from station, this will also increase you capacity substantially.

However, you will then need to purchase more coaches and locomotives too.

Gautrain is perfectly tee’d up for the pension fund INFRASTRUCTURE brigade.

I would like an informed opinion on this as I understood that provincial government guaranteed a level of use that was never attained, so always had to subsidise. BCC don’t really care whether trains run full or empty, they get about the same loot. But school me.

As usual, anything cANCer touches, begins to rot and turn into a decrepit misconception. Like outcomes-based education. And this train is not far behind. I compare it with the Skytrain in Vancouver – what a pleasure, cheap, reliable, safe and available. Gautrain – NOT! A rip-off of note with some doors at certain stations not opening up in order to force you to take the expensive route. Look at all the oil getting burned on our roads daily. Imagine all the foreign exchange savings and reduced environmental impact if gautrain was there to serve us and not the greed of the priveleged.

End of comments.

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