Program Director
Mr. Louis von Zeuner: ABSA Group Deputy Chief Executive
Mr. Bobby Malabie: ABSA Business Bank Chief Executive
Ladies and gentleman
Good afternoon
It gives me a great pleasure and joy to be here with you this afternoon for the signing ceremony of the loan agreement between Gauteng Provincial Government and ABSA for the Gautrain project.
On behalf of the Gauteng Provincial Government, I would like to express our sincere appreciation to ABSA for agreeing to partner with the Provincial Government in this kind of a transaction.
I should hasten to say that this is a first kind of a transaction that has ever been entered into by a provincial sphere of government before; hence we view it as a milestone since the advent of our democracy, signaling a new venture in Private Public Partnerships. And it bodes well with our Provincial Motto; It Starts Here!!! Western Cape and the rest shall follow.
Program Director, I am particularly aware of the dim view that financial institutions have on government’s finances in general and provincial finances in particular; and this has not been made easier by the recent financial crisis that has put a strain in the financial sector. However the fact that we are here today shows that our financial sector is resilient and has successfully weathered the financial crisis storm; the risk profile of Gauteng Provincial Government has and will continue to improve and that our banks still find it important to add value in government infrastructure program.
Program Director, most of the audience here might be aware that the Borrowing Powers of Provincial Governments Act (48 of 1996) does make a provision for the province to raise funds in the market especially if the funds are to be used for the purpose of capital projects, and provided a due process as outlined in the Act has been followed. I am aware that ABSA is indeed satisfied that the Gauteng Department of Finance has followed a due process as outlined in law and that the resources are directed towards capital projects.
It is important to state that the resources that have been raised through ABSA are within the budget of GPG towards the construction of Gautrain Rapid Link. The R1-billion loan amount will be used to convert the short term facility that was made available to the province during the construction phase of the project. From inception, the project was conceptualised such that it was to be funded by both government and the private sector.
Program Director, the funding arrangement from the government side has been structured such that national and provincial contribute to the development of the project on a 50-50 basis split. The Provincial portion has been financed through a Provincial Equitable Share and Provincial Borrowing. The R1billion that Gauteng has just secured from ABSA form part of the borrowing portion of the province.
In conclusion, Program Director let me thank the team that has worked tirelessly in the background to ensure that the loan agreement between ABSA and Gauteng Provincial Government comes to fruition, the Gauteng Department of Finance staff and respective ABSA employees. Also let me thank various Government Officials, Business Executives present here today and our friends in the media.
Finally, I would like to extend our gratitude to the ABSA Group for the trust you bestowed on the Gauteng Provincial Government, by granting it this loan. I look forward to a seven year productive partnership.
I Thank You
