ECONOMIC APPRAISAL

The economic rationale for Gautrain is illustrated by the growth in road vehicle traffic congestion in the corridor between Johannesburg and Pretoria, as well as the growth in air traffic at OR Tambo International Airport and the resulting road traffic growth between OR Tambo International Airport and the Sandton/Johannesburg area.

However, this project was devised not only to support the growth in road traffic but specifically also to support the development associated with other projects in the Blue IQ initiative, underpinned by the need for economic growth and job creation.

From a transport economic perspective, the implementation of Gautrain will lead to lower transport costs in the corridor between Pretoria and Johannesburg, with considerable savings in the travel time of travellers in this corridor. The project will, in addition, bring the Gauteng province in line with other commercial, financial and hi-tech areas elsewhere in the World, in comparable countries, with which South Africa needs to compete internationally.

Economic Efficiency Impacts

Gautrain is justified from a transport economic cost point of view.  This was determined by comparing the total transport cost with and without the project.  Total transport cost with Gautrain was found to be significantly less than the total transport cost without the Gautrain.

In addition, it was found that rapid passenger rail is an economical mode of transport.  Many benefits would be derived from decreased traffic congestion on the road network as commuters move to rail. This will translate into savings in vehicle operating costs, health and travel time for all travellers on this transport corridor.

Macro-economic Impacts

The economic evaluation clearly indicated that Gautrain is economically feasible and justified by an economic benefit versus cost point of view.  Although many of the benefits are not quantifiable in monetary values (such as the significant decrease in air pollution), those benefits that can be quantified already outweigh the project cost by far – indicating that the project is economically beneficial.

The Macro-economic Impacts study (PDF – 4,435 KB) estimated that the economic benefits for the tax-payer, the economy of Gauteng and the road users far exceed the project’s costs. The indications are that the Gautrain project will help to increase South Africa’s Gross Domestic product (GDP) by at least R 2.6 billion per annum (in 2002 Rand values) during the project implementation. Both the government’s fiscal position and the country’s balance of payments will be positively affected by Gautrain over its economic life span.

Gautrain is estimated to provide a number of substantial economic benefits to Gauteng. It is to contribute between 0,7% and 1% to the GGP of Gauteng (i.e. the Gross Geographic Product) – which is significant.

Even though this is by nature a capital-intensive project, Gautrain’s potential to be a major facilitator of income and wealth elsewhere in the country is significant. For example, it is expected that more than 100 000 job opportunities would be created by the project.  This is from the construction and procurement of the project, the operation and maintenance of the service, and the economic development impact in the area close to the rail stations.

The additional GGP that would be created during the construction phase of Gautrain is in the order of R1 880 million.  The operation and maintenance of the service has the potential to contribute almost R37 million to the provincial GGP.

Impact of the Gautrain’s construction on industrial sectors would lead to an increase in business sales of about R3 615 million.  Additional business sales of R327 million per annum would be the result of operation and maintenance expenditure and up to R3 600 million due to the connection of economic activities in and around the stations.

Additional impacts which are of significance are:

  • Personal travel time savings: for the year 2016, the travel time saving amount to R38 800 million.  This means that the Gautrain could save 11 600 person days (working time) or 3,5 million working days per year.
  • Government revenue: the increase in investment in existing properties and new developments tied to Gautrain make-up for the shortfall in property tax from the land taken up by the rail line;
  • Health care and environmental costs: the commuter shift away from road transport is likely to reduce traffic accidents, associated human suffering, third party and medical costs.  The estimated saving in accident costs due to the implementation of the Gautrain amount to R15,3 million.
  • Pollution: Gautrain is likely to contribute to improved air quality due to fewer motor vehicle movements.  The savings in CO2 emissions amount to 70 000 ton.
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