Cape Town | Tuesday
THE planned Coega industrial development zone (IDZ) near Port Elizabeth in the Eastern Cape, which was given the green light by Cabinet last week, should break even by 2010, according to the corporation managing the project.
Speaking in Cape Town at a briefing to businessmen and the media, Coega Development Corporation CEO Pepi Silinga said government could expect to regain its investment in the back-of-port section of the project by 2017.
According to the CDC, public sector commitments to the entire IDZ include funds for a new deep water harbour (R2,5-billion), upgrading of the power supply (R1,3-billion), and the IDZ itself (R700-million).
Silinga said he was referring to the cost of development within the IDZ only.
”We estimate that the cost of the land-side infrastructure within the demarcated IDZ area will be around R700-million… and we have been able to determine we will break even in year eight.”
He said this was estimated from the beginning of 2002.
”Over a period of about 15 years, we would be able to pay back to the shareholder — in this particular case, government – all the money that had been put in for development.
”Thereafter it is really a profitable scenario.”
This time scale was based ”on a number of assumptions, and in the event that things move the way they are moving, like for instance the rand declining, we will be able to generate much stronger returns”.
”You are looking at a rate of return that is going up to four or five percent or so.”
However, there were some infrastructure projects the CDC was looking to ringfence. These included electrification, reticulation, and bulk handling material.
”So the rates of return I am talking about are with respect to those kinds of services that you cannot ringfence, or sell off to a private financier,” he said.
On a R2,5-billion public sector commitment towards the cost of building a new deep-water harbour at Coega, Silinga said this had been part of a separate viability study and was being handled by the port authority. – Sapa