Infrastructure Bill finds no favour
Delays in rolling out critical infrastructure have come back to bite the country, with Eskom asking its major customers to cut 10% of their electricity use this week.
With business confidence low and much debate over the "trust deficit", as the ANC’s Enoch Godongwana termed it, between business and the government, efforts to speed up the country’s R4-trillion infrastructure development programme should provide the state and private sector with some common ground.
Last week Economic Development Minister Ebrahim Patel introduced the Infrastructure Development Bill to Parliament, which aims to speed up these efforts.
But it has drawn mixed responses from experts, who have raised concerns that it may result in more bureaucracy and has introduced uncertainty over whether private sector projects come under the ambit of the Bill.
It comes against the background of the establishment of the presidential infrastructure co-ordinating committee (PICC) in 2011 and the announcement of the National Infrastructure Plan, which was approved by the Cabinet, in 2012. The plan identified 18 strategic integrated projects (SIPs).
In a speech delivered in Parliament last week, Patel laid out the major aims of the Bill, including the establishment in law of the co-ordinating structures of the presidential committee, the creation of a planning framework for infrastructure, the co-ordinating processes between regulators and departments, time frames for decision-making, the power to expropriate for infrastructure projects, and mechanisms to deal with conflicts of interest.
Why do we need the Bill?
The Bill attempts to institutionalise the Cabinet structure of the committee but, aside from its aim to improve facilitation and co-ordination, the proposed legislation presents several challenges, Eric le Grange, director of the law firm Edward Nathan Sonnenbergs, said.
"My first question is: Why do we need it?" The state should have the necessary capacity to co-ordinate internally and across government departments and structures.
The Bill also contains no checks and balances given that the presidential committee is not subject to parliamentary oversight.
The internal workings of the committee, which the Bill sets up, appear "top-heavy".
Aside from the PICC, which includes the president, the deputy president and designated minister, provincial premiers and executive mayors, the Bill establishes a management committee and a secretariat to support the commission, as well as steering committees for each strategic integrated project.
Gathering players a mammoth task
But getting the various players together as required will be a mammoth task, Le Grange said.
The "heavily layered" structures the Bill sets up appear to run contrary to the attempt to avoid administrative and regulatory delays in infrastructure development, he said.
The way it is drafted, the Bill is merely facilitating and enabling in nature, providing the commission with no executive authority or decision-making ability.
The Bill does include processes and timelines for the implementation of the SIPs but this appears to apply only to the preparatory work required before the start of a project.
Importantly, other legislation overrides the processes and time frames set out in the Bill, Le Grange said, including the National Environmental Management Act and the time frames required by the Act in conducting environmental impact assessments, as well as the time frames that apply to public participation.
"The Bill presupposes that all the required regulatory approvals and processes can run concurrently, which is unrealistic," he said.
In addition, the Bill does not grant the commission the power to formulate the National Infrastructure Plan or to ratify the existing plan or the existing 18 SIPs it currently includes.
He also flagged the expropriation clause, arguing that the commission has not been provided with a cost allocation from the budget to fund any expropriation, and it does not have the means to own, or dispose of, any land or assets it expropriates.
The expropriation clause is also watered down and is subject to all other legislation that deals with, or provides for, expropriation, he said. Le Grange also questioned aspects of the Bill’s anti-corruption clause.
As it stands, sanctions for corruption only apply to members of the steering committees on specific SIPs and not to members of the presidential committee, the management committee or the secretariat.
The jurisdiction of the Bill, and whether it applies to private sector infrastructure projects as well as state projects, is also unclear, he said.
The Bill states that any major infrastructure project qualifies as an SIP, falling under the scrutiny of the commission if it meets certain criteria.
The ambit of the commission
These include being of "significant economic or social importance to the republic" or contributing "substantially to any national strategy or policy relating to infrastructure development".
Importantly, any project that falls under a broad schedule attached to the Bill can be classed as an SIP, including airports, hospitals, schools, mines, oil or gas pipelines, refineries and any "economic facilities".
The ambit of the commission only covers the facilitation of things, such as licensing and authorisation, but not procurement.
Nevertheless, it is not clear which projects would fall under the ambit of the Bill and this may have a fundamental impact on the future of infrastructure development. Additional bottlenecks need to be avoided, he said.
Industry players share some of these views. Henk Langenhoven, chief economist for the Steel and Engineering Industries Federation of South Africa, said it is important that the structures the Bill seeks to formalise must speed up the development of infrastructure.
However, if the Bill only succeeds in setting up a "clearing house for requiring and obtaining regulatory approvals", there is a risk that this will simply slow things down.
But the Bill’s provision on expropriation should be seen in light of the difficulties companies such as Eskom have had in acquiring the land needed to build key infrastructure networks.
"This is a common bottleneck and a big constraint to get projects on the move," he said.
The department of economic development did not respond to requests for comment by the time of going to press.