Thursday, 02 June 2016 14:29

Gauteng seeks court review of award over Gautrain

Written by
Rate this item
(0 votes)

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.

 Gauteng_Bombela

The Gauteng provincial government has instituted proceedings in the high court to review the near-doubling of a multimillionrand 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.

source" Business Day

Last modified on Thursday, 02 June 2016 14:45

Most Popular

Hyprop Investments subsidiary acquires flagship shopping centre in Sofia, Bulgaria

Jul 20, 2017
Pieter Prinsloo Hyprop CEO
UK-based Hystead Limited (Hystead), co-owned by Hyprop Investments Limited (Hyprop) and…

Trematon Capital Investments diversifies portfolio with investment in UK Real Estate Private Equity Market

Jul 20, 2017
Arnold Shapiro Trematon
JSE listed Trematon Capital Investments Limited, the Western Cape focused actively…

Encouraging news for home buyers - repo rate now 6.75%

Jul 20, 2017
Andrew Golding Pam Golding
Home buyers and those with mortgages will be encouraged by today’s announcement by the…

Building wealth through multiple properties

Aug 01, 2017
Praven Subbramoney
Many individuals who already own more than one property mistakenly overlook key…

Investec Property unearths Komatsu’s next phase of its campus development

Jul 25, 2017
Komatsu 11
Earth-moving equipment giant, Komatsu, has partnered with Investec Property to…