Tshwane Rapid Transit (TRT) required a total of R786 million to procure 171 buses and the driver training required for the first phase of the A Re Yeng Bus Rapid Transit (BRT) project in Tshwane. TRT signed a R488 million agreement with the DBSA in November 2014 to fund the purchase of 40 Mercedes Benz Compressed Natural Gas (CNG) buses as well as the local content of 131 Volvo diesel buses. In December 2014, an additional R298 million loan was extended to the project.
At the inception of the project, buses will run from Paul Kruger and Nana Sita streets in the Pretoria Central Business District (CBD) to the Hatfield Gautrain Station in Arcadia Street. The A Re Yeng BRT is forecast to transport about 127 000 passengers per day once phase one is operational.
The DBSA is committed to investing in public transport networks to ensure safe, efficient and green transport systems. Tshwane BRT project is one of 12 BRT projects in the country that will receive the DBSA’s support.
South Africa’s Public Transport Strategy (PTS) is moving transport towards an improved quality integrated Mass Rapid Public Transport Network, which includes rail, taxi and bus services. Rapid transit systems have been identified by national government as one of the viable transportation options that can ensure sustainable, equitable and uncongested mobility in the country. The 2020 vision is for 85% of the metropolitan cities’ population to be within one kilometre of a public transport service network line.
The shareholders of the TRT are taxi and bus operators that operate on routes serviced by private buses and taxis, otherwise known as Affected Operators. TRT is managed as an independent corporate entity whose shareholders’ benefit is equivalent to their market share.
Objective being addressed
The National Land Transportation Act (NLTA) provides the legal framework for the development and implementation of the Integrated Rapid Public Transport Networks (IRPTN) by metropolitan cities in South Africa. The NLTA provides the framework for the negotiated 12-year contracts that municipalities can enter into during the implementation of BRT projects. Tshwane’s IRPTN strategy sets out the network plan for BRT corridors and integration with rail services such as the Gautrain and PRASA commuter rail links in the short, medium and long term.
Other key strategic objectives are to facilitate the corporatisation of the affected operators and provide them with value-adding opportunities through training, so as to assist them to access sustainable income prospects.
The City of Tshwane will roll out the buses in phases, with phase one seeing the delivery of the buses in four batches over two years. Ownership of the buses will vest in TRT, which will procure the buses and charge a user fee on a take-or-pay basis using a fee per kilometre payment system that guarantees a minimum number of kilometres to cover debt services, all operating costs and a profit element.
Outcomes and measurable impacts
The project will have a significant impact on the socio-economic and economic development of the city and its inhabitants as well as Gauteng as a whole, with the following development impact:
• An estimated increase of the provincial GDP by R437 million.
• An estimated provincial capital formation of R1 324 million.
• An estimated 1 614 additional employment opportunities, of which 275 will be for unskilled workers.
• An estimated additional R259 million in household income, of which R48 million might accrue to low income households.
• A potential additional fiscal impact for government of R125 million.
• Improved quality of life through an efficient, safe and affordable transport system.
• Empowerment, skills development and local economic development (TRT is 100% owned by a Trust whose beneficiaries are the affected taxi and bus operators on the planned BRT routes).
In 2010, at the launch of the project, City of Tshwane Mayor Ramokgopa expected over 10 000 jobs to be created during the construction phase and about 1 000 sustainable jobs once the system was live. This includes 529 bus operators and related personnel, 94 employees for the call centre and about 300 workers managing and maintaining the ticketing system.
The loan period of 11 years, including availability and grace periods, is in line with typical development finance practice. As a leading metro and TRT project offtaker, the City of Tshwane has a good credit rating with a stable outlook, both of which mitigate the risks associated with this project. With 127 000 passengers on a daily basis, the BRT will have dedicated income throughout the project’s lifespan. The take-or-pay model will also provide sustainable earnings to the company and ensure debt servicing.
Important lessons learnt and critical success factors
Transport is a critical success factor in South Africa’s economy. Therefore this project is important to the country and received the Bank’s full support. The City of Tshwane’s A Re Yeng BRT project drew lessons from the Rea Vaya and MiCiti projects to avoid repeating earlier mistakes made by the City of Johannesburg and Cape Town teams respectively. Government support was key to the success of this project as it allowed the City of Tshwane to use a portion of its grant income to cover the deficit in initial operating costs and to fund the infrastructure components of the A Re Yeng system. The project has the support of the affected operators and has already trained a number of taxi drivers to operate the buses. This provides a more sustainable income for the drivers and a buy-in for the taxi industry. The Trust will provide capacity building for the Affected Operators, who will become drivers as the project progresses. A critical success factor is a successful, complex negotiated settlement that is to be achieved through a long process involving all key stakeholders. For further information contact: www.tshwanetransit.net.