The affordable education loan option
By Lindsay Dentlinger
When it is completed, the Green Point stadium will have cost taxpayers R4,4-billion - four times more than was originally estimated three years ago.
And the City of Cape Town still needs R570-million to pay for it.
The price of the stadium - the biggest single cost of hosting the 2010 World Cup in Cape Town - has increased by almost R1bn a year from its initial estimation of R1.2bn in February 2006.
It has even exceeded the maximum estimate of R4.18bn which an assessment of alternative stadium sites in July 2006 determined a new stadium would cost.
Keeping within the stadium's budget has been a tight balancing act for the City of Cape Town as prices for construction, and the uniqueness of the Green Point site, have caused the costs to grow.
The national government pledged R3bn to build the stadium (of which the city has received R2.2bn so far), while the total contribution of R212m from the provincial government has already been spent.
The city's 2010 spokesperson, Pieter Cronjé, said yesterday that the funding gap was being bridged by an additional interim contingency budget of R220m.
This exceeds the R500m limit the city council had set for ratepayers' money.
Cronje said the excess would, however, be off-set by a range of initiatives including the sale of naming rights, ticket sales, income from the stadium operator and possible additional funding from the government.
The project has been beset by budgetary shortfalls since its inception, including a R180m shortfall that stalled the awarding of the tender to build it, delaying construction by two weeks in 2007.
Private banking institution Investec agreed to stand surety, saying that the value of the operating contract would be worth far more.
When the DA administration took control of the city in March 2006, then mayor Helen Zille stopped the issuing of planning contracts to consultants who had estimated the cost of the stadium at around R1,2bn, amid reports that the council would have to fork out R1bn from its coffers.
Once the project was back on track again and the city was prepared to spend about R2,7bn on the stadium, the cost of a retractable roof and a Fifa pre-cinct pushed costs back up to R3,3bn.
In January 2007, the city said it still hoped that the tender price would be around R2,5bn and was shocked when its preferred bidder - the consortium of Murray and Roberts and WBHO - produced a bid of R3,7bn.
By reducing the size of the stadium slightly, the city managed to whittle the price down to R2,75bn.
But a year later, the project costs had risen above the R3bn mark and by the end of 2008 had exceeded R4bn.
Cronje said that at least R1.2bn of the stadium's expenditure had been incurred specifically because of its location - the need to provide firm foundations in shallow bedrock - as well as environmental requirements, such as noise and light mitigation and the roof design.
"All these costs are expected to be outweighed by long-term marketing benefits of unique location and visual backdrops," Cronje said.
The city will also still have to fork out R78.24m for the stadium management agreement to a sports marketing consortium, Sail, and international stadium management agents Stade de France.