Faced with construction delays and political resistance, Bombardier Inc. risks losing a valuable chance to showcase its rail technology for millions of soccer fans at next summer's World Cup, arguably the biggest sporting event in the world.
Bombardier's rail division was the lead company in a consortium that was awarded a $3.3-billion contract to build an 80-kilometre rapid rail system to link Johannesburg, Pretoria and the Johannesburg international airport. The project is increasingly high profile as South Africa prepares for the international spotlight the World Cup commands.
Transportation is a key issue for the month-long event. The governing body of soccer, FIFA, is putting pressure on South Africa to complete the airport phase of the rail project in time for the kickoff on June 11, 2010.
But with the construction delays, including the late handover of construction sites, the first phase might not be ready until next October - four months beyond the agreed completion date of June 27, according to South African media reports.
The four-member consortium, known as Bombela, says it might be possible to accelerate the construction so that the airport link is completed in time for the June 11 opening match. But this would cost nearly $200-million in additional expenses, it says.
Authorities in the South African province of Gauteng, where the rail link is located, have balked at the cost. The project, known as Gautrain, is already much more expensive than originally envisioned before the contract was signed in 2006, and South African governments are under pressure to pay for housing and social development programs.
"We believe it is possible to meet the World Cup date, but Bombela wants a substantial amount of extra money to achieve this," Gautrain spokeswoman Barbara Jenson said in an e-mailed reply to questions Wednesday.
The provincial government has decided that Bombela's demands are "not acceptable," she acknowledged. "However, discussions between the province and Bombela are ongoing to see whether solutions can be found," she said.
"It is not possible at this stage to say when the first phase would be ready. Bombela may run the risk of incurring penalties, as made provision for in the Concession Agreement, if they do not have the airport link operational by June 27, 2010."
When the South Africa project was announced in 2006, it was seen as a key deal for Bombardier Transportation - its biggest contract in more than three years. Its share of the contract was worth $1.65-billion.
Bombardier gained a publicity bonanza when its train cars were showcased in Beijing during the 2008 Summer Olympics. Bombardier was a key participant in two rail projects in Beijing last year, including a high-speed link to connect the city to the airport. The South Africa deal was seen as offering the same kind of promotional gold mine to Bombardier.
Unless a solution is found, the delays will be embarrassing for South Africa. Instead of being whisked into Johannesburg on a high-speed train, the visiting soccer fans will face queues for buses and possible traffic jams on the highways.
South African media are accusing Bombela of "holding the province to ransom" by making exorbitant demands in exchange for speeding up the project.
South Africa's deputy transport minister, Jeremy Cronin, said the consortium had "negotiated very aggressively" when it was asked if the project could be sped up by 16 days to allow completion before the World Cup began.
"It's a pity that they will not use the World Cup soccer tournament to show off the project," Mr. Cronin told a South African news agency.
"Money means more to them than such considerations.… It would be unwise to pay so much to gain a couple of weeks while government's coffers are under pressure."
Sharon Christians, vice-president of communications and public affairs at Bombardier Transportation, said the company will not comment on the South African situation because of the "sensitive commercial negotiations" currently under way on "critical issues" for the project.
She noted that Bombardier was the lead company when the consortium was formed for the bidding, but is no longer the lead company.
"Gautrain is a fantastic showcase for Bombardier technology," Ms. Christians said by e-mail from the division's headquarters in Berlin Wednesday.
"We have a strong track record in delivering rail transit systems for world events, on time. We're very proud of the work we've done to date on this project and are doing our part to ensure that it meets the aspirations of South Africa and the people of the Gauteng Province."
The other companies in the Bombela consortium are French civil contractor Bouygues Travaux Publics; South African civil contractor Murray & Roberts; and Strategic Partners Group, which consists of several "black economic empowerment" companies in South Africa.Report Typo/Error