 |
 |
 |
 |
 |
 |
 |
News Archive August 2011 Funding Rea Vaya buses
| Funding Rea Vaya buses |
 |
 |
 |
| Thursday, 04 August 2011 |
Cash was raised offshore to buy Rea Vaya's first fleet of buses. Now, lessons learned will be applied when buying the second fleet.
A SPECIAL purpose vehicle was set up to raise funding for the manufacture and purchase of the 143 Rea Vaya buses that take Joburgers to their destinations daily.
The City played an integral part as a transaction sponsor and facilitator to enable Clidet, the initial Rea Vaya bus operating company, to raise funds for the buses, says Norman Qobolo, the deputy director of Rea Vaya modelling and funding.
This means that the funding was raised through the special purpose vehicle, which was formed to ensure that both the buses and the loan that was raised, do not become part of the City's assets and liability.
The first step in raising the cash is to appoint a transaction adviser – usually commercial bank with a potential to underwrite the lending, to advise on the best possible funding mix, at very competitive funding rates and best funding sources.
"Cost-effective funding is determined by the level of interest rates," says Qobolo. This means that local and offshore sources are appraised in order to find a suitable and at times, innovative funding model that has been used elsewhere in the world.
In addition, international financing houses such as ECA's (Export Credit Agencies) also assist in ensuring that the bus manufacturers do not overstate the bus purchase prices.
In the end, funding was obtained from BNDES Bank in Brazil, where the buses were manufactured. The total cost for the 143 buses was R367-million, which means that complementary buses cost R2,4-million each and articulated buses cost R3-million each.
The interest rate charged on the loan was 3,2 percent, fixed for 11 years.
The bus bodies are Marcopolo, a Brazillian design, and the chassis are Scania, a Swedish product.
Qobolo says he will be appointing a transaction adviser in the next few weeks for the 134 buses for Phase 1B. He expects the order to take less than a year to deliver. "Rea Vaya has set the tone for an improved public transport mode in Johannesburg and in South Africa. With the lessons from the procurement of buses for Phase 1A, we are committed to refine our processes and include important aspects such as local content as part of the bus manufacturing value chain". IMPORTED OR LOCALThere are three options when ordering the buses: they can either be imported as complete buses, or they can be imported but assembled in South Africa or they can be fully manufactured and assembled in South Africa depending on the availability of manufacturing capacity in the country. The City has been engaging with various stakeholders within government with a view to find ways on how to localise the manufacture of such buses and or improve the local content of imported buses.
"We need to find ways of attracting investment to set up a plant here, in SA. Obviously Investment will depend on the size of the market, however we need to find innovative ways to attract manufacturers to start production particularly of heavy motor vehicles including buses," says Qobolo.
The "stiff deadlines of the 2010 world cup " influenced the delivery of the Phase 1A buses hence the buses were fully imported.
Qobolo suggests that when ordering the buses for Phase 1B, he is likely to go the same route, although he would like to maximise the local content, which is key to supporting local job creation. Local content could be tyres, seats,windscreens etc, to be added when assembling the imported component of the bus.
PioTrans, which took over from Clidet as the bus operating company, has a 12-year contract to operate Rea Vaya's Phase 1A. It is owned and operated by nine taxi associations, employing over 300 former taxi drivers.
Related stories: |
|
||||
|
||||
|
||||
|
||||
|
||||
|
