One of the most peculiar elements of the recent ‘announcement’ about a new R200 billion airport in the Sedibeng region, close to the Vaal, is that it was not formally communicated by Gauteng MEC of Finance and Economic Development, Lebogang Maile.
Curiously, there is no mention of this—direct or indirect—in the written Medium-Term Budget Policy Statement speech. The only reference to airports pertains to “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
After the speech, Maile addressed the project in several interviews.
He reportedly told 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 work with DTIC [Department of Trade, Industry and Competition] to invest in bulk for that project.”
Claimed to be part of the Vaal Special Economic Zone (SEZ), the airport aims to “reignite the birthplace of industrialization in South Africa.”
The envisioned SEZ is pitched as “South Africa’s leading hub for the hydrogen economy.” Right.
R200bn cost unrealistic
It is exceedingly unlikely for a new airport to cost anywhere near R200 billion (this is thought to encompass the entire SEZ plan). Even R20 billion could be over the top. The total cost for constructing King Shaka International Airport was R6.8 billion from 2007 to 2009, which would convert to R17 billion in today’s currency.
Airports Company South Africa’s plan for the new midfield terminal at OR Tambo International Airport, which includes phase one of a new cargo terminal and passenger terminal, is projected to total R21 billion from 2025 to 2032.
Read: Acsa finally starts renovating dark, dingy, fading OR Tambo
Why would Gauteng try to establish an aerotropolis city in Ekurhuleni at the same time as building a new airport in the Vaal, just 70 km apart? Currently, Gauteng can barely support two airports (OR Tambo and Lanseria), while Wonderboom remains inactive.
The Sedibeng region, which includes Vereeniging, Emfuleni, Midvaal, and Lesedi, does not precisely need another airport. Even if the country’s hydrogen economy hub were to emerge in the next two decades, a new airport wouldn’t be necessary. Hydrogen is not transported by air.
Read/listen:
SA hydrogen economy receives a boost
Green hydrogen: An ‘opportunity to completely reindustrialize SA’
Last year, the entire Gauteng Department of Roads and Transport had total expenditures of less than R10 billion. Furthermore, the province plans to invest R120 billion to expand the Gautrain network in the coming years.
Maile suggested that funding for the new airport would come from private investors. It is clear the government lacks the financial resources for this. Even our allies in China and Russia seem unlikely to support such an initiative. What would be the justification?
High capacity, but for whom?
Yet, the projects appear to be progressing.
Phase one of the Vaal Aerotropolis includes constructing a 4.2 km runway, a terminal planned for seven million passengers annually, and a cargo terminal with a capacity of 150,000 tonnes per year. This phase is projected to cost R32 billion, which feels excessive. The final objective is to accommodate 27 million passengers and 500,000 tonnes of freight.
The entire population of Sedibeng is just over one million. Where will all these passengers come from?
In comparison, Lanseria currently handles about 4.5 million passengers annually and is far from its capacity (FlySafair operates there with up to nine flights per day).
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Moreover, the initial phase of OR Tambo International’s new midfield cargo terminal is set to manage approximately 650,000 tonnes annually.
Who’s at the helm of this initiative?
The Vaal Aerotropolis is being directed by MTP Aviation Solutions, headed by Petko Atanassov (previously involved with Dube TradePort). He gave a detailed interview to RSG Geldsake met Moneyweb last year, one of the few he has conducted.
It is assumed that Atanassov is permanently associated with MTP, with some funding sourced from the R1.4 billion ‘seed capital’ pledged by Citibank for the overall project. There was even a trip to the US sponsored by the US Trade and Development Agency, where this concept received promotion with backing from Citibank.
Read: Citigroup collaborates with SA to fund new Mega River City and airport
Besides the aerotropolis, the Vaal SEZ has a dedicated team of six employees, including a CEO (and office). It is presumed they are receiving substantial salaries, financed either through the seed capital or a governmental subsidy.
In addition to the core team pursuing this ambitious plan, there are likely many consultants who have been generously compensated—potentially amounting to hundreds of millions of rands—for various reports, plans, and budgets filled with complex language and highly specific projections for six years ahead.
These consultants are often tasked with routinely updating 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 foster and facilitate industrial development. Infrastructure investments are essential alongside this.
However, the perplexing approach taken by a confused provincial government to establish two aerotropolis cities (‘aerotropoli’?), one of which is clearly unnecessary, is a massive squandering 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 set up an office and a full-time staff!
(However, it does have a master plan, which, of course, will need near-constant revisions and updates in the coming years—potentially costing millions and maybe even hundreds of millions of rands).
Read: Lanseria International aims for ‘airport city’ development [Oct 2019]
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