Infrastructure spend to rise to R274bn

Spending on public sector-driven infrastructure projects would rise from R185 billion in the last financial year to R274bn in 2014/15 as the government sought to spend on priorities that would “maintain the real value of the social wage and support economic transformation along the New Growth Path”, Pravin Gordhan said yesterday. In the medium-term budget policy statement, the finance minister reported that expenditure by the state – including local, provincial and national government – would rise to R978bn this year and tip over to R1 trillion next year. “In real per capita terms, this represents a doubling of the resources available to the fiscus between 2002/03 and 2012/13,” Gordhan said.

Public sector infrastructure spending would top R232bn in 2011/12, rising to R257bn in 2012/13, expanding to just short of R270bn in 2013/14, and rising again to R274bn in 2014/15. The bulk of that would be spent on economic services – R197bn this year, R217bn next year and R230bn in 2014/15. Economic services include energy, water and sanitation, transport and logistics. Social services, including health, education and community facilities, will see infrastructure spending of R26.6bn this year, rising to R27bn in 2012/13 and R35bn in 2014/15. Treasury director-general Lungisa Fuzile noted that South Africa needed adequate infrastructure to produce and transport goods and services more efficiently, promoting growth and creating jobs.

“Following a sustained decline between the early 1980s and the mid-2000s, capital investment by government and state-owned enterprises has grown rapidly in real terms over the last six years, rising from R67.5bn in 2005.” Key features of the capital investment programme included road network investment and “stepped up” rehabilitation and maintenance of provincial roads and national highways, and expanded investment in bulk freight rail to support mining production. The latter included coal haulage capacity and the iron ore line to Saldanha Bay, to raise transport volumes from 47 million tons to 60 million tons.

Investment in commuter rail infrastructure and rolling stock as part of an 18-year, R80bn replacement and modernisation programme was also part of the infrastructure development drive. Eskom’s capital development programme was intended to double its generation capacity from 40 000 megawatts to 80 000MW by 2025. The Ingula, Medupi and Kusile power projects were projected to be completed by 2014, 2015, and 2018 at a cost of R21bn, R99bn and R121bn, respectively. In addition, Eskom is investing R24bn in returning old power stations to service and R28.8bn on building transmission infrastructure. The second phase of the Lesotho Highlands water project is a R15bn investment in the Pohali reservoir, and associated water transfer and hydroelectric projects.

Over the medium term, the Trans-Caledon Tunnel Authority would invest R5bn in various projects, including the Mooi-Mgeni transfer scheme, the Mokolo-Crocodile and Komati water supply projects and the Olifants River water resource development project.