GAUTRAIN COST SOARS
Posted on 26 March 2009 by Railways Africa Editor
Increases in the South African inflation rate during the past two years have pushed up Gautrain costs by R300 million, the Gauteng Management Agency says. Government, CEO Jack van der Merwe is quoted saying, has put in place protection against foreign exchange volatility: “The Gautrain project carries 25% exposure to foreign exchange. We have bought forward cover for that.” He was referring to a hedging strategy employed by companies and other entities to shield themselves from currency fluctuations.
Van der Merwe explained on 17 March 2009 that the project is exposed to escalation costs linked to the consumer price index. The provincial government has to cover the shortfall.
Interviewed by Lindsay Williams on Classic Business Day on 30 January 2007, van der Merwe said: “The R25 billion (Gautrain cost) is a fixed turnkey price – so that’s everything included. There are only two ways that the price can increase, first if inflation is higher than what the SA Reserve Bank has predicted – and then we are in for the difference – and if there is variation, for example a request to extend the line…”
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