One of the most peculiar elements of the recent ‘announcement’ regarding a new R200 billion airport in the Sedibeng region near the Vaal is that it was not officially presented by Gauteng MEC of Finance and Economic Development, Lebogang Maile.

There is not a single reference to this, even indirectly, in the written Medium-Term Budget Policy Statement speech. Interestingly, the sole note on airports pertains to “the establishment of one of Africa’s first aerotropolis cities, which incorporates the expansion of the OR Tambo Airport precinct.”

Read: Multi-billion-rand Cape Town and OR Tambo airport expansions to proceed

Following that speech, Maile provided commentary on the project during various interviews.

He reportedly told SABC: “We’ve got a new airport coming in Sedibeng which will necessitate an investment, I believe, ranging from R20 billion to R200 billion from the private sector. In fact, it’s roughly R200 billion, and we will collaborate with DTIC [Department of Trade, Industry and Competition] to invest in bulk for that project.”

The airport is anticipated to be part of the Vaal Special Economic Zone (SEZ), aimed at “reinvigorating the birthplace of industrialization in South Africa.”

The vision is for the SEZ to emerge as “South Africa’s leading hub for the hydrogen economy.” Sure.

R200bn cost unrealistic

It is completely implausible for a new airport to cost anywhere near R200 billion (this is assumed to include the entire SEZ plan). Even R20 billion might be too high. The full construction of King Shaka International Airport cost R6.8 billion from 2007 to 2009, which would be approximately R17 billion today.

The Airports Company South Africa’s plan for the new midfield terminal at OR Tambo International Airport, including phase one of a cargo terminal and a passenger terminal, is expected to total R21 billion between 2025 and 2032.

Read: Acsa finally starts renovating dark, dingy, fading OR Tambo

Why would Gauteng attempt to create an aerotropolis city in Ekurhuleni simultaneously while also building a new airport in the Vaal, just 70 km apart? Currently, Gauteng can barely support two airports (OR Tambo and Lanseria), and Wonderboom isn’t viable.

Sedibeng, the area surrounding Vereeniging, which includes Emfuleni, Midvaal, and Lesedi, doesn’t exactly need another airport. Even if the center for the nation’s hydrogen economy were to miraculously materialize in the next twenty years, that still doesn’t mandate a new airport. Hydrogen isn’t transported by air.

Read/listen:
SA hydrogen economy receives a boost
Green hydrogen: An ‘opportunity to completely reindustrialize SA’

Last year, the total expenditure for the entire Gauteng Department of Roads and Transport was under R10 billion. Moreover, the province plans to invest R120 billion in expanding the Gautrain network in the coming years.

Maile vaguely mentioned that funding for the new airport would come from private investors. It is abundantly clear that the government lacks the financial means for this. Even our partners in China and Russia are unlikely to back such an endeavor. What would be the justification?

High capacity, but for whom?

Nevertheless, the projects appear to be progressing.

Phase one of the Vaal Aerotropolis involves constructing a 4.2 km runway, a terminal projected to serve seven million passengers yearly, and a cargo terminal with a capacity for 150,000 tonnes per year. This phase is estimated to cost R32 billion, which seems excessive. The ultimate aim is to serve 27 million passengers and 500,000 tonnes of freight.

The entire population of Sedibeng is just over one million. Where will all these passengers originate?

In comparison, Lanseria currently manages about 4.5 million passengers each year and is far from reaching its capacity (FlySafair operates there, with up to nine flights daily).

Additionally, the initial phase of OR Tambo International’s new midfield cargo terminal is slated to handle around 650,000 tonnes annually.

Who’s driving this initiative?

The Vaal Aerotropolis is led by MTP Aviation Solutions, headed by Petko Atanassov (previously involved with Dube TradePort). He provided a detailed interview to RSG Geldsake met Moneyweb last year, which was one of the few he has conducted.

It is assumed that Atanassov is permanently affiliated with MTP, with some funding sourced from the R1.4 billion ‘seed capital’ promised 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 was endorsed with Citibank’s support.

Read: Citigroup collaborates with SA to fund new Mega River City and airport

In addition to the aerotropolis, the Vaal SEZ hosts a dedicated team of six employees, including a CEO (and office). Presumably, they are all earning significant salaries, supported either through the seed capital or a governmental subsidy.

Beyond the core team tackling this ambitious project, there are surely many consultants who have been generously compensated – potentially amounting to hundreds of millions of rands – for numerous reports, plans, and budgets filled with elaborate language and highly specific forecasts for six years ahead.

These consultants are often paid to regularly update these plans to exhibit ‘progress’.

Puzzling strategy from a disoriented provincial government

Certainly, as a nation, we should be formulating various plans for special economic zones that foster and facilitate industrial development. Infrastructure investments accompany this goal.

However, a confusing strategy from a baffled provincial government aiming to establish two aerotropolis cities (‘aerotropoli’?), one of which is evidently unnecessary, is a significant misallocation 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!

(Though it does possess a master plan, which will undoubtedly require near-constant revisions and updates in future years – at a potential cost of millions and perhaps hundreds of millions of rands).

Read: Lanseria International aims for ‘airport city’ development [Oct 2019]

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