Infrastructure Projects in Need of speedier Administration

South Africa’s National Treasury has finally set up a task team with the financial services industry to find new ways to improve the funding and efficiencies of government’s ambitious fiscal and state-enterprise three-year R827bn infrastructure rollout. Many major government projects have been hamstrung by bottlenecks and delays‚ with Eskom’s continuously moving Medupi power station completion date resulting in a near tripling of costs.

“We want to create a framework that lays out new options for how everyone in the financial sector can participate,” said Nicky Prins‚ director of capital projects at Treasury yesterday. “We need to firstly understand the requirements of the different tasks in the industry and for them to understand government’s policies‚ interests and concerns.” The task team with industry is in place‚ she said‚ with the Association for Savings and Investment being a catalyst to get it going. Treasury said on Thursday at an investment conference in Durban it will represent other parts of government and has been discussing the issue with various departments to come up with solutions.

“We have been developing quite a lot of goodwill and trust‚” said Prins. The value of major infrastructure projects in progress or under consideration in the public sector is over R4 trillion‚ with significant private sector investment needed to provide funding. About 40% of these projects are in implementation‚ but for the remainder of projects‚ concept proposals have to be assessed for alignment with the priorities set out in the 2030 National Development Plan‚ followed by rigorous feasibility evaluations. Prins said government did not just want to share the burden of cost and capital‚ but was also looking at harnessing the efficiencies of the financial sector in raising capital and providing funding.

“SA banks can get involved in all links of this value chain‚ but how we package this has an impact on the costs for end users as well‚” said MD of the Banking Association of SA‚ Cas Coovadia. He said collaboration with the private sector was needed from the beginning and more “crowding in” of the private sector was needed. Assistant general secretary of finance union SASBO Isaac Ramputa said labour has always advocated investment for infrastructure that uplifts communities. He said appropriate labour forums would engage with government on the preservation of funds for these purposes‚ but was concerned there was too much talking and too little implementation. Prins conceded that major cost over-runs were rooted in the planning stages – only 2% of project costs are spent on feasibility studies‚ “but if you get it wrong it affects the 98%”.

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