Pretoria - A claim of more than R10bn against the Gauteng government is seemingly in the offing for "delays and disruptions" to Gautrain building operations.
This is according to Jeremy Cronin, Deputy Minister of Transport, following remarks by Brian Bruce, chief executive of Murray & Roberts [JSE:MUR]. Murray & Roberts is part of the Bombela consortium, which is building and will operate the Gautrain system.
If the claim succeeds, Gauteng's taxpayers will have to foot the bill.
If it does not, shareholders in Murray & Roberts and French group Bouygues, together with the other shareholders in Bombela, would have to bear the additional costs that the contractors have incurred.
For the six months to December 31 Murray & Roberts deferred R230m's operating profit from the Gautrain project in light of this possible claim.
The fact that the project, according to Bouygues, is proceeding haltingly is evident from a reference in the group's annual results last week to the "negative impact of the Gautrain project" on the construction subsidiary's operating profit.
But how has the claim arisen? Bruce says the Gauteng government handed over the building sites late and in a completely different sequence from that agreed upon.
In such a complex project this can totally upset a contractor's planning and involve additional expense.
This seemingly left the contractor with entirely too little time for investigations into soil conditions in dolomitic and sinkhole-ridden Centurion.
The assignment of risk for this dolomite is one of the other points of contention. Jack van der Merwe, chief executive of the Gautrain, from the outset said that it would be for Bombela's account, but Bruce simply smiles at this.
Bruce also announced that Bombela had concluded an agreement with the Gauteng government to accelerate by a couple of weeks a temporary, scaled-down version of the first phase of the train system - the link between Sandton and the OR Tambo Airport - so that it would be completed before the World Cup soccer tournament kicked off.
Bombela would apparently have borne the associated cost, and then later tried to recoup it as part of the claim.
Airport link
Van der Merwe and Bombela technical director Errol Braithwaite said that the agreement had not been ratified yet, although negotiations were well advanced.
In January the Gauteng government rejected an earlier offer from Bombela to accelerate the airport link.
This would have cost the province an additional R1.3bn, but the real thorn in the flesh was that it would be linked to referral of the claim to the dispute-settlement procedure provided in the Gautrain contract.
According to Cronin this would mean that claims for billions would be determined through arbitration in the space of 20 days.
Even if it were tested later in court, the determination would become effective in the interim.
Cronin says the procedure is aimed at quickly resolving small disputes so that the project can proceed.
Frequently the procedure is to divide the amount in dispute. If a claim of R10bn were to be divided in this way, government would have to pony up R5bn that it does not have.
Cronin says the difficulty was that the province would have to borrow it and burden the project with a great deal of debt.
This would also put the sustainability of the project in the balance at the operating phase.
The contractors, who will largely walk away from the project after the construction phase, could delay the subsequent court case indefinitely, while holding on to a stack of money.
According to Cronin, the province is insisting that the claim goes to court, where complex technical and financial information can be thoroughly examined.
Meanwhile, time is running out to reach a substantive agreement about the acceleration of the airport link.
The Gauteng government is, however, determined not to be blackmailed and is reportedly making interim arrangements for bus transport should the train not be ready in time.
- Sake24.com
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