Is Gauteng’s R200 Billion Vaal Airport a Visionary Dream or Unrealistic Folly?
One of the strangest aspects of the recent ‘announcement’ regarding a new R200 billion airport in the Sedibeng region near the Vaal is that it wasn’t officially disclosed by Gauteng MEC of Finance and Economic Development, Lebogang Maile.
Not a single mention of this, however indirect, is found in the written Medium-Term Budget Policy Statement speech. Intriguingly, the only note about airports revolves around “the establishment of one of Africa’s first aerotropolis cities, which includes the expansion of the OR Tambo Airport precinct”.
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Read: Multi-billion-rand Cape Town and OR Tambo airport expansions to proceed
Following that speech, Maile did comment on the project during several interviews.
He allegedly informed the SABC: “We’ve got a new airport coming in Sedibeng which will require, I believe, an investment ranging from R20 billion to R200 billion from the private sector. In fact, it’s about R200 billion, and we will collaborate with DTIC [Department of Trade, Industry and Competition] to invest in bulk for that project.”
The airport is said to be part of the Vaal Special Economic Zone (SEZ), designed to “reignite the birthplace of industrialization in South Africa”.
The vision is for the SEZ to become “South Africa’s leading hub for the hydrogen economy”. Sure.
R200bn cost unfeasible
It is utterly implausible for a new airport to cost anywhere near R200 billion (this is presumed to encompass the entire SEZ plan). Even R20 billion might be excessive. The complete construction of King Shaka International Airport cost R6.8 billion between 2007 and 2009, which would equate to R17 billion in today’s terms.
The plan by Airports Company South Africa for the new midfield terminal at OR Tambo International Airport, which includes phase one of a new cargo terminal and a passenger terminal, is projected to total R21 billion between 2025 and 2032.
Read: Acsa finally starts renovating dark, dingy, fading OR Tambo
Why would Gauteng attempt to develop an aerotropolis city in Ekurhuleni simultaneously while also building a new airport in the Vaal, just 70km apart? Currently, Gauteng can barely support two airports (OR Tambo and Lanseria), and Wonderboom remains a non-starter.
Sedibeng, the area surrounding Vereeniging which includes Emfuleni, Midvaal, and Lesedi, doesn’t precisely require another airport. Even if the center for the nation’s hydrogen economy were to somehow manifest in the next two decades, that still doesn’t necessitate a new airport. Hydrogen isn’t transported by air.
Read/listen:
SA hydrogen economy receives a boost
Green hydrogen: An ‘opportunity to completely reindustrialize SA’
Last year, the total expenditure for the entire Gauteng Department of Roads and Transport was less than R10 billion. Additionally, the province plans to invest R120 billion expanding the Gautrain network in the upcoming years.
Maile vaguely indicated that funding for the new airport would come from private investors. It is abundantly evident that the government lacks the financial resources for this. Even our allies in China and Russia are unlikely to support such a venture. What would be the rationale?
High capacity, but for whom?
Nonetheless, the projects seem to be trudging along.
Phase one of the Vaal Aerotropolis includes constructing a 4.2km runway, a terminal designed for seven million passengers annually, and a cargo terminal with a capacity of 150,000 tonnes per year. This phase is estimated to cost R32 billion, which appears excessive. The ultimate goal is to accommodate 27 million passengers and 500,000 tonnes of freight.
The entire population of Sedibeng is just over one million. Where are all these passengers going to come from?
In comparison, Lanseria currently handles about 4.5 million passengers annually and is not even nearing its capacity (FlySafair operates there, with up to nine flights per day).
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Moreover, the first phase of OR Tambo International’s new midfield cargo terminal is expected to handle approximately 650,000 tonnes annually.
Who’s leading this initiative?
The Vaal Aerotropolis is spearheaded by MTP Aviation Solutions, led by Petko Atanassov (previously involved with Dube TradePort). He provided a detailed interview to RSG Geldsake met Moneyweb last year, which was one of the few he has conducted.
It is presumed that Atanassov is permanently attached to MTP, with some funding received from the R1.4 billion ‘seed capital’ pledged by Citibank for the whole project. There was even a trip to the US sponsored by the US Trade and Development Agency, where this concept was promoted with Citibank’s backing.
Read: Citigroup collaborates with SA to fund new Mega River City and airport
Apart from the aerotropolis, the Vaal SEZ has a dedicated team of six employees, including a CEO (and office). Presumably, they are all receiving substantial salaries, funded either through the seed capital or a governmental subsidy.
Beyond the core team pursuing this ambitious project, there are undoubtedly many consultants who have been handsomely compensated – potentially amounting to hundreds of millions of rands – for various reports, plans, and budgets filled with elaborate language and highly specific projections for six years ahead.
These consultants are frequently paid to consistently update these plans to illustrate ‘progress’.
Confusing strategy from a disoriented provincial government
Certainly, as a nation, we should be developing various plans for special economic zones that promote and facilitate industrial development. Infrastructure investments go hand in hand with this.
However, a perplexing approach from a bewildered provincial government aiming to establish two aerotropolis cities (‘aerotropoli’?), one of which is clearly unnecessary, is a massive misuse of resources and time.
Listen/read: Inside the Infrastructure Fund’s R102bn investment vision
At least President Cyril Ramaphosa’s new smart city at Lanseria hasn’t yet established an office and a full-time staff!
(However, it does possess a master plan, which, of course, will require near-constant revisions and updates in future years – at the potential cost of millions and maybe hundreds of millions of rands).
Read: Lanseria International aims for ‘airport city’ development [Oct 2019]
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