Regarding the undertaker of the project, it is not clear whether the Cape Town city administration or the Waterfront Company will take the initiative, and the case of a joint venture between the two cannot be ruled out. Furthermore, other possible methods of undertaking are available, for example, the construction and running of the rail infrastructure could be performed by a separate body. The viewpoint of the financial analysis is naturally something which should reflect the standing of the undertaker, and indeed it is foreseen that the contents of the analysis will vary depending on the nature of the undertaker. However, because this is something which cannot be confidently predicted at the present time, it was decided to assume that the undertaker would be the private sector where business profitability is vigorously pursued, and project simulation was carried out to identify the various necessary preconditions.
2)Fund Raising
As was mentioned earlier, the total construction cost will come to 161 million rand (assuming 1997 prices), and this will be the initial investment cost of the Project. The following case shall be supposed where the costs are covered by capital and borrowed funds.
Composition of funds: 20% capital, 80% borrowed money
The repayment and interest rate conditions relating to the borrowed funds shall be assumed as follows:
Repayment: 17 years with a grace period of three years
Rate of interest: 5% per annum (real interest level in South Africa)
The period of construction shall be two years from 1998 to 1999 and the year of commencement shall be assumed to be 2000.
