Registered users can save articles to their personal articles list. Login here or sign up here

Sanral to issue R40bn in road-building tenders

Could help lift the construction sector out of the doldrums if done right.

South Africa’s crisis-ridden construction industry has received a boost, with the SA National Roads Agency (Sanral) reporting that it will issue major road construction tenders to the value of more than R40 billion over the next two to three years.

Read: Construction industry in survival mode

The expenditure commitment has been welcomed by various organisations and analysts, with Sanral confirming that its roads network forms the backbone of the country’s transport system and serves as a catalyst for balanced economic growth, business confidence, investment and the transformation of society.

Louw Kannemeyer, the engineering executive at Sanral, says National Treasury has allocated about R21.5 billion a year for the maintenance and improvement of Sanral’s 19 262km non-toll network, which is going towards a total of 940 projects, 325 of which are already under construction.

Not just one or two R500m projects …

Kannemeyer says the new projects will include about 90 major capital works projects larger than R500 million each, which will go out to tender during the three-year medium-term period.

“We expect a surge in road construction projects over the medium-term framework as part of the broader national efforts to invest in economic infrastructure.”

He adds: “We are confident this investment will help to boost the construction sector, which has been under severe pressure in recent years, and also cascade down to black-owned and emerging enterprises who will receive much larger shares of tenders in future.”

Webster Mfebe, CEO of the SA Forum of Civil Engineering Contractors, says the forum welcomes Sanral’s multi-billion rand road projects announcement because it signals “the beginning of the end of the capital drought that has rendered many construction firms endangered species”.

“It also heralds a new dawn for an industry that is currently declining at an alarming rate,” he says.

Sanral standards

“Sanral is well-known for its excellent track record in rolling out projects competently and paying contractors promptly. We sincerely hope it will maintain the same commendable performance standards following the stagnation of road projects in the last two years.”

Wayne Duvenage, CEO of the Organisation Undoing Tax Abuse, says the allocation mentioned by Sanral is a lot more than the agency has been allocated in the past by Treasury, adding that there is no doubt the construction industry needs a boost and Sanral is one of those organisations that could do so.

“It sounds good and right. We have always been of the view that the country needs Sanral,” says Duvenage.

“The country needs the engineers. The country needs good road building.

“But it needs Sanral to work in the best interests of the public, and when it introduces tolling schemes, it must be done properly. It didn’t do that on e-tolling and that is the only reason its credibility as a brand was knocked heavily in 2010 up until now.

“That does not mean to say we don’t need Sanral. We need it to do its work but to do it properly.”

Duvenage says the question is whether the country is getting these roads at the best price, where the projects are located, and how transparent the tender processes are.

More than R8bn for Kzn this year

Kannemeyer says tenders to the value of R8.3 billion for construction work on the N3 between Durban and Pietermaritzburg will go out to tender during the current financial year and will be financed through the infrastructure stimulus package announced by President Cyril Ramaphosa last year.

This will include seven major tenders for projects on the N3, which will be issued within the next three months once the regulatory approvals have been received and land acquisition finalised, he says.

Maintenance projects across the country

Kannemeyer adds that starting this month (August), Sanral will issue smaller tenders related to routine road maintenance and periodic maintenance across the entire Sanral network and in all nine provinces.

The more than 50 tenders will be released in a controlled manner so the market is not flooded, he says.

“The projects will provide economic and social infrastructure that has the potential to unlock economic growth, stimulate local economies and create jobs within the communities that are located close to the construction activities.”

Read: SA’s R416bn road maintenance backlog

Kannemeyer adds that a growing share of contracts will be allocated to black-owned construction companies and enterprises owned by women, the youth and the disabled.

This is in line with Sanral’s long-term vision, with the road agency committing in terms of its Horizon 2030 policy to the transformation of the construction and engineering sectors through the allocation of tenders to new entrants in these sectors.

Kannemeyer says Sanral has, over the past six months, brokered memorandums of understanding between emerging companies and major suppliers of construction equipment and machinery, which gives black-owned companies greater access to financing, expertise, and the sophisticated equipment required to tender for larger contracts.

“We are confident the R40 billion in tenders that are in the pipeline will benefit the broader construction sector and contribute to the growth of new enterprises who have been excluded from major contracts in the past,” he says.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   15

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

Construction mafia will build – No major companies left!!

If this will get the construction industry out of the doldrums why is it happening after the industry has been destroyed?

Oh. I forgot. The country is run by the ANC NEC. No ability except for destroying things.

They will be building with the rif raf that is left. Many people has left the country the others might not go back to the industry.

Get the Chinese.

But…but this ANC NEC is the one giving you R40bn which you don’t have…Who is supposed to help if not the ANC government?

R40bn is not enough. Even ten times the amount won’t suffice. No amount of money can prevent the infrastructure of a country from reflecting the mindset and attitude of the average voter. This is what Eskom and all SOE’s are teaching us. As South Africans, we are all students, receiving a practical lesson in socio-economics. How do we react to this information? Well, that depends on our personal socio-economic situation.

It is sad that even good news, such as this, in the end isn’t good news, because its to little too late and nobody knows if it will be done correctly. Shame on the people who led us to this place.

It is of national interest to maintain local economies of scale-type construction companies through road building tenders and losing this capacity should not be an option. As for the SOEs, it has always been clear that these are political payoff instruments for creating and sustaining a BEE class, which in-turn serves as a bulwark against economic and political collapse. Therefore making SOEs more economically efficient is not necessarily the best option in my opinion. Another question is whether this model is sustainable.

The construction mafia and “local community thieving forums” must be rubbing their hands. This time they will demand 60%, not 30%, or else we will burn your equipment, or no road will be built.

ANC and ANC affiliates half baked solutions! The reasons why nothing in this life time is going to change until we get decisive leadership.
How is Sanral going to address the construction mafia and company who causes delays and projects to be abundant because of the escalation of costs?

Chinese is the best option.

They bring their own labour that don’t strike and their own mafia that will give the construction mafia a run for it’s money. They then take the money out of the country so nobody has to worry about it being used in a way unbecoming to our young democracy.

True that. The Chinese have shown that they can get away with murder in the ICT industry under the noises of the government and Communications workers Union. Go on Chinese, take advantage of the sleeping dogs.

Lol , more BE thievery on the way.
A planned substation in my area already 8 months behind schedule on a 24 months project . govt projects in SA simply a plundering exercise

Watch out for tender collusion and fraudulent activities! Tender awards should be made to those with sufficient resources, capacity and capability. No tenders should go to front companies under the pretext of BEE.

The GFIP cost R27 Billion to build for 184 kilometers of road which means that we can get around 270 kilometers for R40 Billion. Or doesn’t it work like that?

This is a small step forward.

Which listed companies will benefit from this spending?

They can issue tenders – will they pay on time? How many companies doing government work have folded due to cash flow issues while they wait for ever for government to pay!

Load All 15 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
Insider GOLD
ONLY R63pm

Moneyweb's premium subscription is a membership service which will give you access to a number of tools to take charge of your investments.
Or choose a yearly subscription at R630pa - SAVE R126

Get instant access to all our tools and content. Monthly subscription can be suspended at any time.

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2