Gauteng seeks court review of award over Gautrain

This could mean big payouts to construction companies including Murray & Roberts, and a much bigger hole in the province’s pocket.

Gauteng provincial government institutes proceedings in the high court to review the near-doubling of a multimillion rand award against it in respect of the Gautrain.

This could mean big payouts to construction companies including Murray & Roberts, and a much bigger hole in the province’s pocket.

The award, in favour of Bombela Civil Joint Venture, which designed and constructed the rail system, has now been determined at R624m excluding value-added tax.

Relating to the cost of construction of the so-called Gautrain Sandton station cavern, an arbitration tribunal in March provisionally awarded Bombela R354m, subject to final ruling on the amount.

Bombela comprises shareholders Murray & Roberts (45%); Bouygues (45%); and Strategic Partners Group, a broad-based black economic empowerment company (10%).

It had lodged a claim against the province through the Bombela Concession Company, which operates the Gautrain system under a concession agreement. The concession company is opposing the province’s application for review.

“If the review by the Gauteng province fails, this will be a onceoff and positive for Murray & Roberts’s bottom line,” analyst at Momentum SP Reid Securities, Sibong-inkosi Nyanga, said on Tuesday.

Many big South African construction companies have been in the financial doldrums since the end of SA’s 2010 soccer World Cup, as projects tailed off. They have also been hit by stiff competition authority penalties.

Ed Jardim, group investor and media executive at Murray & Roberts, said the escalation of the value of the award — from the date on which costs were incurred to the date on which the award was issued — was based on its values in rands and euros.

“Province is also liable for all arbitration costs related to this matter … and … has to pay interest at the prime overdraft rate, plus 2%, from the date of finalisation of the amount due,” Jardim said.

Bombela is claiming additional costs from the province, incurred following design changes to cantilever bridges in Centurion. A ruling was made in favour of Bombela in May. The quantum of the claim is to be determined in October. “Once the quantum has been determined for the bridges claim, it will be added to the final Sandton cavern amount — yet to be finally adjudicated,” Jardim said.