Gautrain surpasses wildest expectations – usage growing at 5% a month, already at level only projected by 2026

I love working with Gugulethu Mfuphi. We shared a radio studio evenings at Moneyweb. Today saw the start of a new television partnership on CNBC Africa’s Power Lunch. Gugu is a poised presenter whose confidence stems from her discipline in thoroughly researching the subject. Including the one featured here, one close to the hearts of many Gautengers. The province’s world class Gautrain has surpassed even the most optimistic expectations. As Errol Braithwaite explains in this interview, the company’s pre-launch spreadsheets have been trashed. Supported by its 98% on-time performance, usage has surged to levels only expected 13 years hence. The rush hour crush is set to worsen with additional rolling stock only due in two years’ time. Once Gauteng’s e-tolls kick in, the already sharp 5% a month passenger growth is sure to gain even more momentum. Gautrain is a success story worth celebrating. – AHErrol Braithwaite

To watch the full interview on CNBC’s Power Lunch click here

ALEC HOGG: Gugu, we were talking about Gautrain earlier and your guest sitting next to you, Errol Braithwaite, is a big mover there. I am a big fan Errol because I walk up to the Rosebank station some days – when I am feeling energetic – and I come through on the Gautrain to Sandton. Increasingly those trains are being used more, so perhaps the sceptics were wrong.

 ERROL BRAITHWAITE:  We are absolutely delighted with the take up of ridership on the trains.  Year on year we are growing train ridership at about 60%, bus ridership at over 100% per annum. So, you know we are now beginning to face, in fact, the welcome problem of capacity constraints, particularly during the morning peaks. What we find is, those folk who know the Gauteng area, the traffic on the freeway in the mornings coming southwards from Pretoria towards Johannesburg is really busy.  The same with the trains.  It is literally standing on one spot and of course vice versa in the afternoon.  To try and combat that, we are trying to shift some folk into the off-peak period and so we have introduced off peak discounts, as you have in many places in the world.  We have inserted additional train capacity, on the North as well as the East/West line.  In fact, we have got train capacity running on the system now that we only anticipated to have in the year 2026.  So, it shows you that the take up has been dramatically ahead of what the projections were as you correctly say back in 2005/2006.

GUGULETHU MFUPHI:   You mention you have incentives for people to travel on the trains in the off-peak periods.  How successful has that been?

 ERROL BRAITHWAITE:   Look, it hasn’t been as successful as I would have hoped.  But I think part of the reason for that is that the incentive is not quite big enough yet for you to go and persuade your boss that he now needs to offer flexi-time hours at work…

GUGULETHU MFUPHI: Get in at 10 and leave at 7?

  ERROL BRAITHWAITE:   Exactly.  It is a cultural change, it is a lifestyle change.  It is a working environment change.  It is not just a simple consumer choice you know, it really is a lifestyle change, so that is quite hard to embed. I think the incentive needs to be fairly significant to do that. We have only got 15% discount at the moment. Obviously we are monitoring that very carefully on a daily basis to see what the take up is. And what we have found is that  month by month we are increasing ridership, probably about 5% per month, and about 70 % of that increase is in the off peak period.  So, it is having a difference, but not quite as dramatic yet as we had hoped.

GUGULETHU MFUPHI: Moving back to the peak period, your trains are known to operate very timeously.  If it says the train is arriving in the next five minutes, it will arrive and leave and load all the passengers within that space of time.  How are you looking at improving on that, or more importantly maintain it, given the fact that you are trying to introduce more trains to increase capacity?

ERROL BRAITHWAITE:   We are contractually obliged to meet certain punctuality and availability standards and we are very proud of the standards we have managed to meet.  But having said that, I am humble about it, because it is a very technical and complicated system and of course, we live in the real world and on the odd occasion things go wrong.  At the moment, we are running at train punctualities of about 98%. That means that 98% of our trains arrive and depart within three minutes of the scheduled time. That is world class by any standards.  It is a better punctuality rate than the best systems in the UK at this stage, so we are very pleased about that.  But having said that, you know it takes an extreme amount of vigilance on the maintenance side, on the operational side, to maintain that sort of record.

 GUGULETHU MFUPHI:   Naturally with the increased capacity must come with increased costs. Where are you looking to get additional funding – from the Gauteng Government or private investors?.

 ERROL BRAITHWAITE:   Additional passengers are obviously beneficial to the cost effectiveness of the system.  Providing additional railing stock availability, additional trains, upgrading signaling, putting in passing loops and additional stations, of course all of that comes with fairly significant Capex costs, as well as operation and maintenance costs.  All of those are subject to very stringent studies, very carefully calibrated financial models, because ultimately it is you and me, the tax payer, that is funding this project and so therefore we are accountable to the taxpayer, so these things need to be done very carefully.  For argument’s sake, that is why it is not as simple as just place another order for another 20 train sets. And several billion rand later, we can all sit with our feet up in the trains.  It doesn’t work like that.

 GUGULETHU MFUPHI:   So how stringent is that process?

 ERROL BRAITHWAITE:   It is very stringent.  It needs to be signed off at several levels within the government and of course, you know there are private sector lenders to the project as well.  Bombela itself is an investor in the project, and has borrowed money from institutional lenders to put into this project. So all of those returns need to be carefully evaluated and to make sure that the whole thing hangs together.

ALEC HOGG:   The Bombela Concession Company – is Murray and Roberts a participant?

ERROL BRAITHWAITE:  Murray and Roberts is the primary shareholder in the concession company.  Bouygues, the big French contractor is also in there.  Also Bombardier, a Canadian company that  provided all the trains and the signaling systems and the track work.  Then we have two other partners, one called SPG, Strategic Partner’s Group, who was a special purpose company set up as a BEE component of the Bombela Concession Company.

 ALEC HOGG:   They must be delighted if you are already at 2026 levels. Coming back to all these detailed spread sheets you have put together – you may as well throw them out the window, Errol, and start again.

ERROL BRAITHWAITE:   In fact we have.  That is quite right.  You must remember the context. I can remember attending the investor’s conference in 2001, and remember what was in the news then.  It was still the Arms Deal and all of the doubt and the perception that South Africa couldn’t do big projects without there being questions asked before we could put big financial deals together.  It took five years before this concession agreement was signed. It was a very important deal to do, for South Africa to incorporate.  If that deal had fallen over at that stage, when the government needed to go on road shows and get another R100 billion for power stations and things like that, the international financiers would have said “we have seen this before”.

 ALEC HOGG:   What is the impact of e-tolling going to be?  Because now it is going ahead, surely that makes Gautrain much more attractive for people who live close to the highway?

ERROL BRAITHWAITE:   The primary component of our customers at the  moment are people who commute to work, working 8 to 5 and so those peaks in the morning and afternoon are intense already and they are intense in a fairly uniform direction.  What we will need to do to accommodate e-tolling passengers, and the additional demand that they place on the system, is we will need to try attract people into the off peak period…

GUGULETHU MFUPHI:   Why not expand?  More money?

 ERROL BRAITHWAITE:   These are fairly long term plans. There are plans in place to procure additional rolling stock But that is probably still two years away.  It takes a while to get these things up and running.  And as I say, we are way ahead, you know we are in year 15 in terms of demand although we are in year one in terms of the actual contract.

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