The new CEO of the Gautrain Management Agency believes that failures to deliver must have consequences. As he sets out to create “railtroplises” around Gautrain stations, Tshepo Kgobe is convinced that the public-partnership model where a “knowledgeable public party” ensures that high standards are maintained is the best model for mass public transit.
What is your mandate?
The mandate of the Gautrain as it stands now in the GMA Act is for us to implement the project, then manage the project and its assets and to ensure that we secure the finances of the entity itself. We need to ensure that we create financial sustainability over the long term and create jobs.
Socio-economic development is a big part of what we do. To integrate with other transport modes the process allows the MEC to require us to assist on any projects that are public transport and rail related.
Somebody might ask, ”Why are you building a taxi rank?” and I will tell them it is a mandate from the MEC, it’s public-transport related. We are assisting PRASA in some of their operations and in resuscitating their operations here in Gauteng and in other parts of South Africa, and that comes from that mandate. When we get asked to assist other entities, we do exactly that.
To whom do you report?
The MEC is the shareholder. We need to demystify this thing: the Gautrain as an entity and its assets are actually owned by the Gauteng Provincial Government. They are owned by GPG and they own those assets through the Department of Roads and Transport. The Gautrain Management Agency is the custodian of the assets on behalf of the Gauteng Provincial Government and the Department of Roads and Transport.
So there are no private shareholders?
No, none of the assets are privately owned. It is operated by a private entity, an operation where we contracted somebody privately to operate it but the assets are fully owned and paid off. Gautrain is a R45-billion asset that is owned by the Gauteng Provincial Government.
Please tell us more about what you are doing related to integrated transport.
The most interesting one is a partnership we have with the taxi industry. The taxi industry is contracted to provide last-mile services. Our distribution and feeder services in stations like Marlboro station in Alexandra and the surrounding areas are provided by them. In Centurion and other stations, they are provided by the Tshwane taxi industry. We contract the one part of the transport industry that nobody wants to touch, and it’s one of our most successful partnerships. We have integrated with the minibus taxi associations to provide scheduled services for the Gautrain.
People always ask us whether taxi drivers do not fight with us over our taking their routes. They don’t, because we contract the taxi association that owns the route to operate on that route. We’ve been running this for 13 years and it runs like clockwork because we do our due diligence. We check through the registration system in the Department, we check with the cities, we get concurrence from both the provincial departments and authorities in various cities that that particular route is owned by this particular taxi industry. The lines are very clear.
How are passenger numbers post Covid, are you recovering?
We’re recovering but it took a while. With the work-from-home culture, it took a while for the numbers to recover. In the last week of February, we breached 60% and went onto 64% of our previous numbers. But the freeway is full. A lot of companies have instructed their employees to return to work on a full-time basis. We are seeing the effects of it but we want it to translate fully back to about 50 000 passenger trips per day and then we will be satisfied. Not happy, but satisfied.
What does that represent in percentage terms?
That will be about 94% of pre-Covid numbers and then at 55 000 to 57 000 we will be back to 100% of pre-Covid numbers.
Do you know the total numbers?
A total of 175-million passengers have been carried on the Gautrain since its inception.
What is the percentage of the airport traffic of your general traffic?
Pre-Covid, the airport service carried about 10% of our ridership and the General Passenger Service carried 90% of our services all throughout the day. We have three services running over the line: the Airport Passenger Service runs from the airport directly into Sandton. Then the service that runs on the same line from Rhodesfield into Sandton and finally the North/South GPS service from Hatfield in Pretoria all the way to Park in the Johannesburg CBD. Passengers can transfer from one service to the other in whatever direction they’re travelling.
How far advanced are the plans to expand the network?
The Premier in his recent State of the Province address announced that all three planned new routes will be expanded to all corners of the province. We have a short-term plan, which is the Soweto line that takes off from Sandton and then goes out to Randburg and on to Cosmo Junction, through Little Falls, through the Roodepoort ridge into Roodepoort and all the way to Jabulani. That becomes the Phase 1 line.
Are the finances in place?
Part of the process is for us to be able to look at the structuring of the finances and the important part is that we will have to relook at the finances. We want to ensure that the government’s contribution to the building of the extension is reduced as compared to last time. We’re looking at the division of revenue at allocation coming down to being at most 30% to 33% and then we would have private investors being 33% and then land value and station optioning and property development making up the other 33%.
We are intentionally developing properties or transit-related developments in and around our stations. You have the aerotropolis which is a city around an airport; we are setting out to develop a “railtropolis”.
Property prices have gone up around Gautrain stations, not so?
Yes definitely. In the last economic impact study, we showed that for properties within a 5km radius, property prices grew at market plus 5% greater than any other sector. Even in the 10km radius, property prices still grew decently above the market growth.
Are you buying new rolling stock?
We are acquiring more rolling stock but we are acquiring it not as a standalone project but we are doing it as part of the re-concessioning of the system itself.
Please unpack the concessioning system.
A concession agreement allows the private operator to operate the assets on our behalf and for that we pay them some part and then they get part of that money from their revenue earnings. The question we have had to ask now that the Gautrain has been built is, are we going to operate the systems ourselves?
We have the assets and we have had success in having the separation of duties. You have an asset owner who gives an asset out for operations and levies penalties on the person if they do not operate the system properly. Then you have an operator who earns a fee for operating the system itself. We thought this is the best method possible of being able to get the best practice out of operating railway lines. On most days we operate at 100% availability and 100% punctuality, which is unheard of in South African terms.
The concession has a fixed term?
It has a 15-year term. The old concession had the construction and the development period included, so it was a 19-and-a-half-year term with four-and-a-half years for the development part. We are going into another 15-year concession at the end of March 2024. We have put the bid out into the market.
You were involved in the engineering details of the foundation of the Gautrain. What were the biggest challenges that you and your teams faced back then?
There were multiple challenges that we faced. In today’s context of looking at the extensions we are planning, it seems that sentiment towards public transport hasn’t changed in 20 years. When you say you are going to build a railway line, everybody says, “No, not in my backyard.” And then there are those who have experienced the Gautrain and you are getting a sentiment that says, “Why is it not coming into my backyard?” We are caught between the NIMBYS and the WIMBYS, as they now call the people who are asking, “Why not in my backyard?” As CEO, how do I work with this to satisfy everybody?
The biggest challenge originally was the line location. Where my office is right now is not where the Midrand line was supposed to run. It was supposed to be on the western side of the freeway because that’s where the residential areas are but because there was such great fear of what kind of a system we were going to bring, that was the biggest challenge. It is the mental shift of being able to get people to understand that we are bringing a world-class system. A lot of businesses would now rather have their back wall being the Gautrain because they know that secures their businesses.
Anyone who has travelled on the Gautrain can’t but be impressed. What are the key pillars to the Gautrain’s success?
The fundamentals of a good transport system is that it must be functional. The availability of the system, the punctuality of the system, the punctuality of supporting systems such as the buses and the minibuses, the escalators and all of that, that basic product has to be functional before you add fancy technologies. The basic product – which is a train ride – must be safe and it must be reliable.
A lot of things fall into what we call hygienic factors. When they are in the background rather than them being the issues we argue about, then you then can superimpose technology on it. A good ticketing system will enhance the customer experience because the customer has the ability to be able to manage their own access. They can reload their card on an app or on a website or even travel with their bank card.
We recently upgraded the technology so that you don’t need to buy a ticket, you can just show up with your debit card or with your credit card and ride on the system. That ease of access is the next level.
Gautrain is known for the professionalism of operations and staff who seem to care about what they are doing. How do you get that right?
Under concessioning I raised the issue of the separation of duties. First and foremost, it is a fallacy that the private sector would do this on their own. You have the kind of system that we have now because there is a knowledgeable public party (an agency such as ours) that ensures that these things happen. You need an agency that without fear or favour will lay penalties on anybody who does not live up to the contract. Then you need a contract that is enforceable. Our contract is enforceable and the penalties are big if the services do not operate. We don’t want a contract that is penalty prone but it must be service prone, it is pro-service more than anything else.
As I tell the team here, I am not in the business of penalties, I am in the business of providing services. The penalties have to incentivise service.
So there are consequences?
There are big consequences and expensive consequences.
How do you maintain that kind of excellence within your organisation?
I was told by an old mentor of mine, “Hire good people.” The rest of it takes care of itself. We hire the best. For our general interviews the minimum is a two-hour interview. We only bring the best to come and work with us.
We source from both public and private but we only take the best in the market and that has always been my mantra. I will always hire for skill and capability and the rest of the things like employment equity come after the skill; the skill has to be there first and then we can talk about the other transformational issues.
What are your short- and medium-term goals as CEO?
The short-term goal is for us to be able to move the business with great speed to becoming self-sustaining. The operations of the entity have to completely come off the fiscus. We have to make our own money, so commercialisation is a big part of what we have to move with. We’ve already started with drivers’ licence and testing centres where you can get your new licence, you can register your car and you can get all sorts of other government services. That is turning out to be big business. I am meeting with Treasury to confirm additional funding for us to roll out these centres all around the province.
We are an agency that is gearing itself to be of great use not only to transport people, but to the greater public. We are also looking at developing a lot of properties around our stations and bringing on additional services. We will be self-sustaining and from then onwards we will start clawing back the amount of subsidy that is paid by government to subsidise the commuter.
I want to ensure that any money we get from the state goes directly into subsidising the commuter and maintaining the asset, not working to sustain the agency.
And the expansion projects of the new lines form part of your plans?
We have already started the process. I have had a meeting with the project steering committee and it is all at full speed. We also are looking at putting the new contract in place, another key issue. We also have to close out the current concession.
The amazing thing is that in and around South Africa there isn’t anybody who has closed out a concession similar to ours. We are the first, so we are creating new knowledge and as we continue with that, we have to make sure that we manage the knowledge and we have it recorded so that it can be shared with other people when they do this later on.
You have worked overseas and you’ve worked in the private sector. How have those experiences informed your approach to being CEO?
When I left the private sector, I explained to people who questioned my decision that my idea is to build public companies that are similar to private companies out there. If I can do that, then I would have served my country well. That becomes important: how do you meld in the capability that comes from the private sector with the rigour of spending public money? We have done that well enough at GMA so that we had 11 clean audits and I have been involved in nine of those.
Biography
Tshepo Kgobe is an engineer with more than two decades of experience in managing complex projects and operations with diverse technical requirements in infrastructure, energy and mining. A graduate of UKZN and Henley Business School (BSc, Civil Engineering, and diplomas and certificates in business management), Kgobe has also worked on strategy related to BBBEE, transformation and corporate social investment and marketing.
His experience in the private sector includes serving as an Executive Director on the board of Hatch Africa and a period in the UK with Corus Rail Consultancy. He also worked at Metrorail. Tshepo was responsible for the engineering and project management of the trackwork subsystem in the Gautrain Rapid Rail Link project.
He then held the position of Senior Executive responsible for all technical and project services in GMA and was until recently the Chief Operating Officer of the Gautrain Management Agency, responsible for the everyday running of the agency. He assumed the role of CEO in February 2024.
