/ 23 February 2011

State to spend R800bn on infrastructure

Finance Minister Pravin Gordhan on Wednesday announced infrastructure spending of R800-billion over the next three years, to boost the economy and create jobs.

The money will be spent on new power stations, roads and rail facilities, schools, hospitals and government buildings, with a special focus on ensuring security of electricity supply and improving transport facilities to support trade.

The biggest project under way, Eskom’s Medupi power station, is expected to cost R125-billion. Transnet’s multi-product pipeline and the freeway improvement scheme will cost just over R20-billion each, while the state will also spend R8,3-billion on building and bettering schools.

“To grow the economy more rapidly, South Africa needs sufficient electricity to run factories, mines, schools and households; well-maintained road and rail networks to transport people and goods; ports and pipelines to facilitate domestic and international trade,” Gordhan said.

Caution
But he cautioned that the public sector’s record on infrastructure spending was “not great”, and said Treasury would tighten control on the way projects were appraised.

In 2009/10, the public sector failed to spend R12,4-billion of its capital expenditure budget, with municipalities failing to spend 17 cents out of every rand allocated for infrastructure.

The minister said the government had adopted a new approach to planning for major new infrastructure projects, notably in housing and public transport.

“To reduce bottlenecks in infrastructure planning and approval, the National Treasury is developing a framework for appraising public-sector infrastructure problems.”

Specialist support programme
The government would build capacity in provincial departments to enable them to roll out infrastructure projects more constructively, and set up a specialist support programme to help rural municipalities implement projects.

The minister said the expanded public works programme, which aims to create 4,5-million work opportunities between 2009 and 2014, is expected to spend R1,5-billion in 2011/12, and steadily increase this to R2-billion by 2013/14.

The programme will be allocated R73-million over the next three years.

It should see 6 000 young people trained in artisan trades by 2014, and the department of public works would see to it that at least 15% of those who come through the national youth service programme are placed in employment opportunities.

Gordhan said massive investments in power supply and the road and rail network, including Transnet’s, would be funded largely through borrowing, and the costs would be “recovered from future electricity consumers and road users”. — Sapa