AT THE END of August, South African Rail Commuter Corp signed its long-awaited concession agreement with operating contractor Metrorail, setting an annual subsidy of about R800m. Under discussion since 1995, the deal has been delayed by concerns over job losses.

By moving from deficit-support to a fixed price contract, the agreement transfers the revenue risk for commuter operations from the government to Metrorail. Annual subsidy is currently R1·2bn, down from almost R1·4bn in 1996-97. Metrorail Chief Executive Officer Honey Mateya says staffing has been cut from 12000 in 1994-95 to 8500, whilst fare revenue rose from R561m in 1997-98 to R610m in 1998-99. In addition, SARCC is allocated R350m a year for capital investment, although Managing Director Wynand Burger says nearer R500m is needed to maintain the ageing fleet plus R700m a year for asset renewals

The agreement is intended to serve as a blueprint for future concession deals with the private sector, following the opening up of the business to competition after 2003. Transport Minister Dullah Omar expects to call tenders next year for a pilot private concession linking Springs, Germiston, Nigel and Daveyton east of Johannesburg, and to hand over the operation in early 2002. He says ’we desperately need an injection of capital and new commercial skills.’