Transport Minister Joe Maswanganyi has confirmed that negotiations are ongoing with China for the construction of the Moloto Rail Development Corridor, but insisted the project will benefit South Africans because local labour and subcontractors will be used.
His comments come amid reports that South Africa was negotiating a R57-billion contract with the Export-Import Bank of China, which had allegedly insisted that a Chinese company, China Communications Construction Company (CCCC), be awarded the contract in exchange for financing the project.
In an interview this week, Maswanganyi said no deal had been signed and that a suitable funding model was still being sought.
“We must make it very clear, there is no contract that has been signed. It is a memorandum of understanding … between Prasa [the Passenger Rail Authority of South Africa] and China through CCCC,” he said.
“Once we are satisfied with the funding model, it’s then that we will take it to a higher level where we are talking about entering into agreements. And we will make sure that they are above board.”
The project will build a railway along the R573 Moloto Road to ferry commuters between Limpopo, Mpumalanga and Gauteng. About 12 500 jobs are expected to be created over the five-year construction period.
Maswanganyi said that, although a Chinese company was likely to bring its own professional staff, government would make sure that all subcontractors were South African.
“There is no labour that will come from China. They might bring their own, at the level of engineers and professionals, but labour will come from South Africa,” he said.
“We won’t bring subcontractors from outside South Africa. That cannot be allowed, because, in the end, the people of South Africa will not be really empowered.”
Last month, Maswanganyi appointed an interim board at Prasa after being accused of stalling appointments since July when the previous board vacated office. This followed multiple bitter court cases about the dissolution of the board by former minister Dipuo Peters in March and threats of dissolution by Maswanganyi in June over alleged financial mismanagement.
Maswanganyi took over from Peters in March after President Jacob Zuma’s shock Cabinet reshuffle during which Peters was removed from Cabinet and resigned as an MP.
Some projects came to a halt because there was no board and executive posts were not filled. Prasa was also unable to present its 2016-2017 financial statements to the auditor general.
Maswanganyi said he had given the interim board, chaired by advocate Nana Makhubele, strict instructions to ensure that the troubled parastatal returned to normal as soon as possible.
“I’ve emphasised to them that they must advertise all the vacancies of executive posts and I believe they are going to do that. I also emphasised that they should make sure that they unlock projects that have stalled as a result of the vacuum because of the absence of the board,” he said.
Maswanganyi has other woes. The South African National Roads Agency Limited has accumulated R3.6-billion in unpaid e-toll fees since the inception of the system in 2013.
The minister said government sympathised with motorists and was looking for ways to ease the financial burden, but the department was in a “catch-22 situation because, if people don’t pay, government will have to bear the cost and government’s money is people’s money”.
The transport department also plays a central role in government’s Operation Phakisa, which hopes to create one million jobs with the oceans economy by 2033.
The department hopes to transform the ownership of shipping vessels used to import and export goods to and from South Africa.
“This is an industry dominated by international players who own big vessels. Also it is dominated by our white [South African] counterparts.”
Maswanganyi said government wanted to see “people who live along coastal communities benefit in the form of fishing licences, benefiting from job creation and being part of the manufacturing of those vessels”.
But, he said, the transformation efforts would be futile without development finance institutions doing more to provide financing opportunities. “Unless we find finance for our people, there is no way they will be involved in the mainstream of our economy, let alone Operation Phakisa.”
Maswanganyi said his department was also working to amend the Land Transport Act to make provision for e-hailing services such as Uber and Taxify, which are currently not accommodated in any legislation.