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Government unveils R595bn pipeline of new infrastructure projects

With a funding gap of around R441bn for the 55 projects being presented to the market.
President Cyril Ramaphosa says the current framework is ‘not really workable’ but that amendments to the Infrastructure Development Act will be proposed in the coming year. Image: Siyabulela Duda/GCIS

The government has unveiled a pipeline of 55 new catalytic infrastructure projects from various sectors valued at about R595 billion, that will create an estimated 538 500 employment opportunities.

However, Minister of Public Works and Infrastructure Patricia de Lille said on Thursday there is a funding gap of about R441 billion for the 55 new projects being presented to the market.

De Lille said this year’s Sustainable Infrastructure Development Symposium South Africa (Sidssa) project pipeline focuses on the following areas:

  • Potential public-private partnerships (PPPs);

  • The green economy;

  • Student housing/accommodation;

  • Manufacturing and industrialisation;

  • Social infrastructure;

  • Infrastructure Fund-approved projects; and

  • Investment into the digital economy.

Head of Infrastructure and Investment in the Presidency Dr Kgosientsho Ramokgopa said 60% of the 55 projects are at an advanced stage of preparation and only 40% at early preparation stage, which means many can be rapidly graduated to support President Cyril Ramaphosa’s Economic Reconstruction and Recovery Plan.

‘Big pool of global liquidity’

Ramokgopa added that if these projects are properly packaged, there is a big pool of global liquidity that can be directed towards supporting some of the infrastructure project programmes that the government is initiating in the second instalment of sustainable infrastructure developments.

He said in addition to improving the quality of projects coming through, they are also attending to some other issues, including bulk infrastructure financing.

Ramokgopa said this is the exclusive domain of municipalities, but it is well known that the balance sheets of municipalities are deteriorating and their “fiscal head space has been obliterated, which is undermining/sterilising projects”.

“This is undermining the ability of the private sector to participate in this space because if there is no water, if there is an insufficient supply of electricity, if the road network is not sufficient or the capacity is not improved, the private sector is unlikely to move,” he said.

Integrated projects

The government in July 2020 unveiled 50 strategic integrated projects (SIPs) and 12 special projects involving an investment of R340 billion that were supposedly “shovel ready” and would commence within three months as part of Ramaphosa’s infrastructure investment drive to stimulate the economy.

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Ramokgopa said when these initial projects were unveiled that funding from the debt capital market accounted for R340 billion of the total investment in these projects and they would not draw any money from the fiscus.

De Lille told the second Sidssa on Thursday that pitching sessions were held with the market prior to Sidssa 2021 to increase the supply/quantum of projects towards bankability and showcase projects in South Africa’s infrastructure portfolio for raising capital from national and international investors.

She said Sidssa 2021 is a platform created by the government to continue forging the social compact between government, private sector, labour and civil society in the infrastructure space.

“As government, we are demonstrating the importance of investing in infrastructure development to create the conditions conducive for the crowding-in effect by the private sector.”

She said given the challenges in regard to budget constraints, it is vital that government works with the private sector to invest in projects that will ensure inclusive growth and development to assist the recovery of the economy.

De Lille said public infrastructure investment is central to achieving greater productivity and competitiveness, reducing spatial inequality and supporting the emergence of new job-creating sectors.

“It is thus one of the non-negotiable foundations of transformation and inclusive growth.”

Project update

In an update on the 62 projects unveiled at the inaugural Sidssa in 2020, De Lille said 33% of these projects, involving about R119 billion of the R340 billion of investment, are in construction and some have been completed.

Completed projects include the N1 Winburg Interchange and N1 Ventersburg to Kroonstad Roads projects in the Free State, and the N2 Mtunzini Toll Plaza to Empangeni in KwaZulu-Natal.

De Lille said three of the 62 gazetted projects are in the procurement stage, with the preferred bidders appointed in the emergency Risk Mitigation Independent Power Producer Procurement (RMIPPP) programme for 200 megawatts of energy announced by Minister of Mining and Energy Gwede Mantashe a few months ago.

She said construction is scheduled to start “within the next 12 months” on a further 13 of the 62 gazetted projects while the remainder “are at various stages of preparation and feasibility”.

Ramaphosa stressed that a number of projects are underway throughout the country.

“Many of our people throughout the country often say ‘Where are these infrastructure projects? We don’t see them.’ They are underway,” he said.

Ramaphosa said the National Development Plan (NDP) says that the ratio of gross fixed capital formation to GDP should be at least 30% – but following the recent recalculation of South Africa’s GDP, this ratio is currently just below 14%.

“This is not desirable for an economy of our size. Underspending on public infrastructure budgets compounds this problem,” said Ramaphosa.

Plan drafted

“That is why Infrastructure South Africa has drafted a National Infrastructure Plan 2050 that sets the vision for what needs to be achieved in public infrastructure and the policy stances required to get there,” he said, adding that the focus is on capital investment in the large network sectors of energy, water, transport and the digital economy.

“At least a third of the capital required for this infrastructure should come from the private sector,” said Ramaphosa.

He added that government recognises that the current policy and legal framework for public infrastructure is fragmented and not really workable, with many overlapping institutional roles and poor accountability.

He said Infrastructure SA will in the coming year be proposing amendments to the Infrastructure Development Act, including new regulations, and amendments to other legislation, including the existing PPP regulations.

Ramaphosa said the regulatory framework intends to clarify roles and responsibilities among all relevant organs of state in the preparation, approval, procurement and delivery of large infrastructure projects and programmes, whether they are designed as PPPs or for direct fiscal expenditure.

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SA Forum of Civil Engineering Contractors (Safcec) CEO Webster Mfebe said if there is funding that is committed for the 55 new projects to be implemented, “that is very much welcome” because contractors are struggling.

However, he said these projects might not be new projects but projects that previously started and stalled.

“While they have announced the government projects in the way they have, they must also fast-track the impediments to private sector projects, especially those that require licences and permits,” said Mfebe.

“Private sector projects create new jobs. If the government thinks the economy will be built on the back only of public sector projects, they are making a mistake because government needs to find money to pay for them,” he said.

Mfebe said a conducive environment must be created for private sector projects to get off the ground.

He said if the construction industry has to rely on the fiscus, it means it has to rely on a tender system that has corruption problems because “everybody is vying for the limited opportunities that are created by public sector spending on infrastructure”.

Read: Bidding for a fair shake

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This is great news. Since 1994, we have seen an unprecedented amount of infrastructure development, which has stimulated economic growth and improved the quality of life, of millions of South Africans.

In just 27 years, we have seen the building of new highways, roads, stadiums, tourism infrastructure, housing etc.

Unfortunately, the pessimist’s in our society will exaggerate the negative aspects of our country, to the point that they overshadow anything positive.

Tsek Bell Pottinger troll

…and that noise you can hear in the distance is country’s BMW sales personnel doing the Dance of Joy. Poor lambs; there will be food this Christmas after all…

What utter nonsense. You need a decent douse of reality. I’ll start you off. Have a look at the Clanwilliam dam project. You’ll find that after years and years there has been no progress. They have fully paid (very big salaries, I assure you) engineers that have been sitting around twiddling their thumbs, doing nothing. They even buss people in from Graafwater, Lambertsbay and other towns to come and sit around, yeah, you guessed it, doing nothing. They have a yard full of equipment slowly rusting away, doing nothing. Millions and millions of Rands have already been spend, yet nothing. You, EFF Commissar, are completely blinded and hamstrung by your ideological infatuation. Open your eyes man!

Same as the Hospital up the road in Port Nolloth. Millions spent on a new hospital instead of upgrading the existing one. Built the new one in about the only place in town where water pools, so more millions spent moving rubble in to raise the ground level. Expensive fences built that are falling down already. Oh, and lots of security staff and cleaners but only one GP.

Hell you must be smoking some good stuff.

I didn’t know sheep could type.

Re infrastructure, all schools and clinics should be fireproof, for when the cadres come to visit

… Just like that 15 million stadium…

The same “funding gap” as Eskom’s debt burden!

R50 billion will disappear before the ink is dry. 8 year olds will be CEO’s of earth moving equipment companies. Etc, etc.

Plus a few deceased relatives of F&F – Family & Friends.

Pre election promises and post election looting.
How you can publicly announce new projects and then include some already in execution is beyond me !!

Without realtime visibility and tracing the spend these pipedream projects may not be the ‘bang for buck’ that SA needs.

We have learnt with bitter experience that capital in the hands of a corrupt regime, like the ANC, just gets squandered.

There are adequate proven block chain tools to give society 100% transparent visibility on all Govt spend and its time we implemented them.

Another day, another Plan……….

…….another 500 billion down the drain

question is: what happened to the country’s well oiled infrastructure that the anc took over – from railway, pipeline, an operative eskom, saa, etc etc. – it was run / ruined into the ground by the anc and cadre employees – now, before the election to proudly announce, R595bn of new infrastructure projects with a cash shortage of R441bn already, how naive must one be to believe this – don’t even mention “public-private partnerships (PPPs)” – the private sector / tax payer is not interested in cr-ppy day dreaming ideas that does not deliver at the end of the day

Two things that make me furious about this pre-political ellection announcenent:
-the inherited infrastructure was always there but iso extending it, it was ruined by the anc;
-all work is done at the most incompetent and uneconomical way and that is called “job creation” – see overseas how the same task is done 100x quicker & cheaper

There are massive pools of local and global liquidity just waiting for the ANC as a business partner, EWC hanging over their heads, and a raft of BEE to comply with!?

SA Inc is uninvestable. It will forever remain a pipeline.

Like the SAA deal, expect nothing to happen

A billion here a billion there, pretty soon you’re talking real money!

dankie vir die lag uit my pens Oubok!

One has to wonder if this is not just another way to channel funds into pockets.

South African politicians have moved from denying to admitting to ‘nobody does anything about it’ and ‘everybody’s doing it.’

The consequences of ‘no consequences of failure.’

Their imagination has no limit.

This is brilliant news. The SA economy can finally fly higher than 5% growth per annum once more!!!

I’ll set myself a reminder so that I can come back in 5 years in order for you to explain why the economy didn’t grow at 5% and why the majority of these projects either stagnated, collapsed and were riddled with corruption.

South Africa is not even close to reaching the bottom of economic and societal decline, from which point it will take decades if not a century to rebuild the nation.

Oh you don’t give to wait 5 years, simply go back to 11 September 2013 and ask why this grandiose statement fell as flat as a pancake. The laughable “New Growth Plan”

“Zuma promised in 2011 that government would create 5 million jobs over 10 years, which meant creating half a million jobs every year between 2010 and 2020.”

Sigh …

We have the financial capacity to fund this project, but the government lacks the human capacity to implement this project. The government is morally and intellectually bankrupt because the government is the ANC.

You omitted “infinitely corrupt”.

Free food, free houses for all, free cars to all over 18s, freedom to get to street corners with level and trowel at your own time…no more pressure.

The corruption flood gates are open again!!! This is how the current regime “TRIES” to get re-elected. GIVE AWAY’S YES YOU TOO CAN BE PART OF THE GIVE AWAY’S!!!Buying votes. BUT DO THEY KEEP THEIR PROMISES???????

Incorrect headline, if governments involved it wont be R595 billion, its actually a R10million project which will end up costing R5trillion. On top of that, theres no “funding gap” they’l just use people pensions.

Basic Calculations:
A single jobs costs R620,000 to create X number of jobs stated by the minister 538,500 = investment required R333,870,000,000.

This dearest minister states that R595,000,000,000 investment will be required / by 538,500 jobs to be created = each job will cost R1,104,921

Wow that is a big difference, on one hand the minister never states that the jobs will be local South African Jobs, on the other hand her cost per job is extremely inefficient.

There are various data models used to calculate the cost of creating a job the the easiest one is dividing the Total GDP R3,200,393,000,000 by the broad definition of employed persons 5,200,000 which means each jobs roughly costs R615,460

Having to create a job at over R1,1mil is either a gross miss calculation or we are going to have some of the worlds most expensive labour.

Roll up roll up construction cos and get ripped off once again by the anc who do nt pay their bills. ask the cos that were brought to their knees by these thieving clowns .ppp = end of the road

Is that the President posing for the picture? These projects are as ready as he is prepared to action what he is demonstrating to be doing? Rolling up the sleeves to implementation the promises he made is attested by history, not to be the case. Is Eskom ready, amongst other supportive SOEs?

Isn’t this just exquisite timing for the upcoming municipal elections? Fool me once, fool me twice, fool me ad infinitum until the economy collapses entirely.

Is this the same supremely opportunistic Patricia De Lille who came from the Pan Africanist Movement and moved to the Pan Africa Congress, then the Independent Democrats, and then on to the Democratic Alliance but now purports to be the new saviour of SA politics in the Good party and yet is a lackey of the ANC?

I seem to recall she was Mayor of Cape Town from 1 June 2011 – 31 October 2018 yet did nothing to rehabilitate this municipality for the disadvantaged nor find land for “affordable housing” in the Metro.

She also oversaw the waste of R40 million (a million here a million there – who cares) joke called the SA-Zambia Border Fence.

Pardon my cynicism …

…ooops that should be “Zimbabwe Border Fence” …

Wow! Economic growth for the select few. Couldn’t imagine anything else.

After 27 years of ‘reconstructing and development,’ all that is apparent is that more funds are redistributed into the wrong pockets under the guise of ‘development’ and serves a dual purpose, i.e. Buy votes and make your cronies even richer!

Does the funding gap imply another IMF loan?

What happened to the last 550-odd billion?

Here we go again. Year after year we get the same “promises”, 10 million new jobs, 5 million new job opportunities, 400bn infra-structure projects, 650bn new infra-structure projects in pipeline, . . . it never stops.
Bottom line . . . all pie in proverbial sky. All intended for third world consumption.
Next year, same promises. No action. Its Africa after all!!

End of comments.

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