Fin24

State eyes R137bn passenger rail upgrade

2011-11-02 10:44

Johannesburg - The government has agreed to fund R137bn of investment in modern rail infrastructure, Business Day newspaper reported on Wednesday.

Such a large commitment would place more strain on an already tight government budget.

The paper quoted Passenger Rail Agency (Prasa) chief executive Lucky Montana as saying Finance Minister Pravin Gordhan could announce the first tranche of the finance package in his 2012 budget in February.

“There will be no private funding at all. It will all be from the fiscus because the cost of private funding will be huge and unaffordable,” Montana said.

The National Treasury could not immediately comment on the possible funding.

The majority of South African commuters use privately operated minibus taxis, which are more expensive but more reliable than passenger rail services.

Comments
  • Hennie - 2011-11-02 11:01

    Fantastic, get the train service to the same quality as 20 years ago and we will see fewer busses, taxi's and trucks on the national roads. Transport will be cheaper and products will be less affected by the rising fuel costs.

  • tinus.kotze - 2011-11-02 11:15

    Yipppeee, government allowed me to say something positive again about them!! Well done, I hope it is done properly with full transparency and to the benefit of the people who will use it, not the people who are managing it. I will stay positive, please don't dissapoint me again...

  • Duane - 2011-11-02 11:16

    I guess R37b will be used for the upgrade and the remainder will be used to fund more corrupt politicians. Malema off to the launch of his rail company in Mauritius? The majority of tax payers don't live near the existing rail routes, why must we burdened with paying for the upgrades if we're not going to use the service? At least there'll be fewer taxi's on the road.

      whois - 2011-11-02 11:50

      You have to keep in mind that South Africa's economy is based on taxpayers carrying non-taxpayers. That's not going to change in the foreseeable future. We can moan to our heart's content but it's not going to have any effect. While I have my doubts about this project, I also believe that any project that allows people, especially those in rural areas, to be able to start earning their own money will slowly but surely start to push the weight to the other end of the scale.

  • Samantha - 2011-11-02 11:23

    great news for once , just make sure they are fire proof,

  • lydonmcg - 2011-11-02 11:26

    Excellent news. They just need to learn to maintain their new infrastructure and keep it clean, lest this all be for nought in a few years' time.

  • David Barnett - 2011-11-02 11:32

    Please just make it a wide track, get rid of these narrow tracks that pollute South Africa.

      kgare84 - 2011-11-02 11:38

      at R35M a KM, unless we get the chinese to built, Vavi wont be happy.. 137BN is not much.. Good luck

      Kyle L - 2011-11-02 11:52

      On the contrary it is actually sufficient, at 35 million per a kilometer, it would give the government just under 4000 km. Linking up (Cape Town / Johannesburg), (Johannesburg / Durban), (Cape Town / Port Elizabeth / Durban), forming the base triangle of 3102 KM = R108 billion. Finally linking up central South Africa (Johannesburg, Bloemfontein, Port Elizabeth) at 895 km will cost them R31 billion - therefore exceeding their budget by a mere 2 billion, minimal additional cost, for such a big project (of which I doubt that central south africa has even been considered at this stage.

  • Kyle L - 2011-11-02 11:39

    Finally we will have First World class transport! About time we get high speed trains, this is going to cut down transport expenses in passenger and freight tremendously!! :D

  • whois - 2011-11-02 11:41

    I don't know if this is such a good idea. The government is taking on a lot of 'new' projects and no 'let's start fixing the mistakes we made' projects. The money would be better used in other areas. Just think of the economy boost this would give if those funds were for example used to subsudise fuel?

      Markusman - 2011-11-02 17:43

      in other words, reduce the tax on fuel. theres no net gain from that.

  • tokoloshe - 2011-11-02 11:46

    JUST WERE ARE THEY GOING TO SOURCE THIS KIND OF MONEY. PERSONALLY I DOUBT WHETHER THEY REALLY KNOW WHAT A HUGE AMOUNT OF MONEY THIS IS.

  • Hans - 2011-11-02 12:12

    Perhaps the Government should first pay off their debt ($122,157,534,247) +/- R975 Billion [http://www.economist.com/content/global_debt_clock]

      Kyle L - 2011-11-02 14:58

      Hans all governments that are well run have debt,its when the debt hits anything above 40% of GDP that you should worry....the logic of not going to the capitat market when the cost of money is too high makes senses,especially at the moment with country credit rating being lowered,also spending money on infrastructure projects will lead to increased economic activity leading to more taxes being collected and thus more money to pay off the debt....yes yes the is corruption bla bla but that is the nature of business all over but this government has delivered on many high profile projects

  • Saksak - 2011-11-02 12:13

    Great news. Since these projects take years to complete, it will be R137bn over 4 -7 years meaning that it's 20-30bn per year from a fat budget of over R1 trillion per year.

  • Rob Gunning - 2011-11-02 12:18

    Why not turn the current rail system into a profitable business and use those profits to fund extnesions and upgrades. I take the train on a daily basis and there is so much that can be done to get the system in shape without spending R137 billion rand.... REMEMBER THATS BILLIONS = 137000 Millions. Fix it first then make it better, simple business skills.

  • Tangofox - 2011-11-02 13:11

    Projects like this have all kinds of domino effects. Better commuting options allow for more people to get to/from work on time. More productivity increases GDP. Higher GDP means SA can pay off world debt faster. Safer public rail transport means fewer people are forced to rely on taxis. Few taxis means more efficient traffic flow. Better traffic flow means less congestion. Efficient public transport also means fewer cars on the road. Which will reduce the consumption of petrol and diesel. Less demand for fuel will bring the price down (simple suppy and demand rubrik) Cheaper fuel prices reduce the cost of almost everything we buy in stores, resulting in a lower cost of living, even for those who don't use the new rail system. Don't get me wrong. I understand there are many other factors that intimately affect my theory, but you get my drift. Unfortunately I'm not all optimism though, I ask myself how much of that R137bn will disappear into the pockets of certain passengers on a different train... The gravy train.

  • kosmonooit - 2011-11-02 13:13

    I find this really scary. 1) Big public Cap Ex, massive potential for graft 2) Not addressing the human resources and skills needed to make and keep existing infrastructure working, let alone any new system.

  • Ends - 2011-11-02 13:31

    No government in the world can ruin a profitable business. Privatise the rail network but keep it local ie no overseas companies. We need to keep our money here and stop paying overseas companies for what can be done here.

  • Robbex - 2011-11-02 14:30

    Too much is spent by government on new projects because they provide positive exposure and opportunities for kick-backs. Far too little is spent on maintenance, cleaning and upgrading of existing assets. Enough please, I am broke already.

  • Gerald - 2011-11-02 14:43

    R137Bn now, R200Bn then -look at gautrain and eskom. Dont forget incentives for "officials" -time to go long ANC full boots. Any brokers here?

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