Murray & Roberts to fix Gautrain water leaks despite uncertainty on cost

Murray & Roberts CEO Henry Laas says his group may have to try a second time to fix the leaking tunnels at Gautrain but has no idea how much the work will cost.

The costs of repairing water ingress at Gautrain tunnel will be split between the partners in the Bombela Civil Joint Venture in which the lead contractor Murray & Roberts (M&R) has a largest shareholding.

The JSE-listed construction and engineering group, Murray & Roberts may have to try a second time to fix the leaking tunnels but has no idea how much the work will cost, group CEO Henry Laas said last week on Thursday.

He was speaking at a hastily convened conference call for company "stakeholders" after Wednesday’s news that the arbitration process over water seepage on two sections of the tunnel had gone against the company.

Mr Laas said it was the "objective of Bombela and the province to not interrupt the service if possible" but he could not rule out the possibility. But he stressed the tunnel’s safety was not compromised, repeating that the tunnel was "fit for purpose".

The problem of "water ingress" has haunted the Gautrain project since the tunnels were completed four years ago. This week’s ruling by the Arbitration Federation of South Africa ended the fight between the Gautrain Management Agency, which manages the train on behalf of Gauteng, and Bombela. The federation agreed with the province that water seeping into the train tunnels does not meet the contractual specifications. The affected parts are between Park Station and E2, the emergency exit near the Wilds and between Marlboro and Rosebank.

Mr Laas said "there is no obvious technical solution and for that reason our experts will now engage with government experts to see what can be done".

Bombela must also cover the legal costs of the 15-month long arbitration battle over the interpretation of contractual requirements regarding "water ingress". Mr Laas said he did not know how much this would cost. The last time Murray & Roberts and its partners in the Bombela civil joint venture (which includes Bouygues and SPG) tried to halt the rate at which water was pouring into the tunnel, it cost R200m.

The tunnel has been designed to allow for water to drain through it but it is doing this at a higher rate than the 10 litres per 10m a minute allowed for in the contract.

Mr Laas said Murray & Roberts had not made any provision for the potential liability that could come from "water ingress" but the company was hoping to have greater clarity on the scope of the provision it would need to carry by February, or possibly June, depending on how quickly the work began with the province on finding a solution.

The arbitration tribunal ruling had suggested that a financial settlement may be appropriate for the water ingress problems in the section of tunnel between Rosebank and Marlboro, he said.

Murray & Robert hosted a separate call for analysts and investors earlier in the day. Avior Research analyst Dirk Noeth said it sounded as if the group would try to reach a financial settlement for both sections of tunnel that were identified as problematic. He said the risk of attempting to repair the tunnel was that it could have the same outcome as before, making a financial settlement more attractive.

"If you listen to (Mr) Laas, he seems of the opinion they are going to go for a settlement rather than try to work through it … even if they go and try to fix it, they might still not be able to. If you go and try to regrout it you are not guaranteed you will be able to manage the water ingress to the contracted level," he said.