South Africa’s public sector capital expenditure (capex) is expected to grow at an average of 18,8% per annum over the year-year period covered by the 2005 Medium Term Expenditure Framework (MTEF) from an average of 11,7% a year between 2001/02 and 2004/05, the Treasury said in its Budget Review on Wednesday.
The rising trend in public sector capital formation is driven by the finalisation of investment plans by big public enterprises, growth in public private partnerships (PPPs) and the stepping up of infrastructure allocations to all three spheres of government.
The 2005 Budget allocates an additional R14,1-billion to infrastructure projects over the next three years compared with the 2004 MTEF.
Increased allocations for municipal infrastructure over the next three years, particularly for sanitation, brings the total Municipal Infrastructure Grant (MIG) allocation to R21,2-billion.
The MIG grant is increased to accelerate the eradication of apartheid era backlogs in township roads, water, sanitation, street lighting, community centres, and to increase employment through labour intensive construction methods via the expanded public works programme.
The provincial infrastructure grant, which funds provincial roads, schools and clinics, receives R13,2-billion over the next three years.
The housing budget receives an additional R2-billion over the MTEF, bringing the total housing infrastructure budget over three years to R17,4-billion.
In addition, a further R3-billion dedicated to community infrastructure is still to be allocated to departments over the MTEF.
To meet South Africa’s growing transport needs, an additional R1,35-billion over the MTEF period is allocated for roads and passenger rail infrastructure, such as stations and coach refurbishment. Of this amount, R500-million was allocated for provincial and national roads each, bringing the Department of Transport infrastructure transfers to R4,9-billion.
A further R3-billion dedicated to transport systems infrastructure is still to be allocated to departments for both public transport and transport infrastructure for the 2010 Soccer World Cup.
An additional R850-million over the MTEF is allocated for water resource infrastructure such as pipelines and dams, bringing water affairs infrastructure spending estimates to R2,4-billion over the MTEF.
Other large infrastructure budgets over the MTEF include the hospital revitalisation programme with health infrastructure expenditure projected to be R4,3-billion and national public works infrastructure expenditure of R3,3-billion.
Over the next three years, infrastructure plans in the criminal justice sector include prison facilities to alleviate overcrowding (R3-billion), police stations (R1,2-billion) and court facilities (R820-million).
About R1,1-billion will be spent on the electrification programme in the 2005/06.
Major public enterprises have signalled expansion of their economic infrastructure.
Transport utility Transnet has finalised its investment plans and expects to spend about R30-billion on infrastructure, including port and port operations infrastructure, freight rolling stock, rail, and fuel pipelines over the next three years.
Eskom’s infrastructure plans amount to R56-billion over the three years, and include investments in power generation, transmission, and distribution.
Total capital expenditure by non-financial public enterprises is estimated to be about R115-billion over the MTEF.
The delivery of infrastructure through public private partnerships (PPPs) slowed in 2004/05, mainly due to national road projects awaiting environmental approval.
However, since the Medium Term Budget Policy Statement in October 2004, more PPP projects are envisaged, resulting in increased forward estimates. – I-Net Bridge