22 Feb 2022
We will provide an update on some of the 62 projects in the Infrastructure Investment Plan which was approved by Cabinet in May 2020 and contains projects form all three spheres of government, state-owned entities and the private sector.
I will also be speaking to some of the key issues within the mandate of the Department of Public Works and Infrastructure (DPWI) as highlighted by the President in the 2022 SONA.
Background
The Infrastructure Investment Plan forms a central part of the Economic Reconstruction and Recovery Plan (ERRP) aimed at stimulating economic growth and job creation as announced by President Ramaphosa in October 2020.
The projects within the Infrastructure Investment Plan were gazetted as Strategic Integrated Projects (SIPs) in line with the Infrastructure Development Act in July 2020 enabling them to follow an expedited path to ensure implementation.
The projects have been gazetted as SIPs to contribute to economic growth by reviving the construction sector and creating much needed jobs for people.
The Infrastructure Investment Plan was highlighted as the “flywheel to economic growth” by the President and contains 62 projects across the country in various sectors which are at various stages.
It must be noted that most of the government projects in the Infrastructure Investment Plan are implemented by the respective government departments, spheres of government and SOEs with DPWI and ISA playing a co-ordinating role of oversight and to assist with raising funding from outside of the fiscus and assist with any blockages on projects.
Through the SIPs, government is leading by investing in infrastructure and creating the conditions conducive to create the crowding in effect by the private sector to create jobs.
Infrastructure Fund
In August 2019, following a Cabinet approval, the Infrastructure Fund was announced as a ring-fenced division of the Development Bank of Southern Africa (DBSA).
The Infrastructure Fund was operationalised in 2020 with a commitment of R100billion from government over a ten year period and has been capacitated with the requisite skills and capacity to enable it to achieve its blended financing mandate.
Over the next three years, R24 billion has been allocated to the Infrastructure Fund for blended financed projects.
The Infrastructure Investment Committee has met several times with myself as the chairperson of this committee.
Projects are approved by the Infrastructure Fund for blended finance with contributions from the fund and the remainder to come from the private sector.
The below Infrastructure Fund pipeline projects were submitted for Budget Facility for Infrastructure (BFI) for consideration.
Progress on SIPS
A number of the projects have been launched and are progressing well especially in the human settlements and transport sectors and we highlighted a number of these with site visits last year.
We are not just making announcements, we will only launch projects after all processes have been completed such as the financing.
In the coming weeks we will be visiting more projects which have started, starting with the N2 Nodal mixed residential development in Nelson Mandela Bay Municipality, the Sondela Phase 2 and the Jeppestown Human settlements projects in Gauteng. I encourage the media to join these visits to see the progress first hand.
Last year we visited the following projects which were progressing well:
Transport Sector Projects:
The Department of Transport’s projects with SANRAL as its implementing Agent, is progress well in terms of the delivery of National Roads in South Africa. Of the SIP 21 Gazetted projects, the following projects are completed:
Projects in Construction:
Projects in Procurement stages include:
Small Harbours Repair and Maintenance Programme: SIP 21 m
Phase 1 entails the redevelopment of the 13 proclaimed fishing harbours in the Western Cape currently being implemented by DPWI which includes the refurbishment and upgrades of the harbours to an 80% operational efficiency. The repair programme is just over 97% completed and is expected to be fully completed by March 2022.
This programme is being implemented at the following harbours:
To date, this project has created 894 job opportunities and empowered local SMMEs to the value of R114 million.
In April 2021, Dr Ramokgopa and I conducted a site visit to the Saldanha Bay harbour Project and in December 2021, we opened the refurbished multi-purpose centre at the Hermanus Harbour which is being utilised by local traders as part of efforts to stimulate local economic growth and create jobs for the surrounding coastal communities.
Phase two of the Small Harbours SIP includes the new small harbours identified in the Eastern Cape, Northern Cape and the KwaZulu-Natal which is currently in the project preparation stage.
Human Settlements Sector Projects
The Human Settlement Sector is progressing at an accelerated pace with Social Housing receiving much of the attention in the past year.
The Social Housing Regulatory Authority has worked closely with the Infrastructure Fund where they were able to unlock R305 million approved funding over two years for the Priority Social Housing Projects.
I will now go into some highlights of human settlements projects rolled out in the past financial year.
In total 18 housing projects have been gazetted as SIPS to the value of R129 billion which together will produce more than 190,000 housing units and is estimated to create over 263 000 jobs.
Water & Sanitation Sector
Under the Strategic Integrated Project 19: Water & Sanitation, the sector has a total investment value required of approximately R115bn. The projects are expected to create more than 20 000 jobs during construction and over 14 000 jobs during the operational phases. The projects that are ready for investment include:
Energy Sector Projects: SIP 20
Special Projects
The Welisizwe Rural Bridges Programme, SIP 25
This is one of the 12 special projects also gazetted as SIPS and this programme involved the implementation of bridges in the rural areas to assist communities to access social amenities and economic opportunities, especially during inclement weather.
As we know many rural communities are severely impacted by flooding and lack of access where we see many community members especially young children having to cross dangerous river streams to get to school or clinics and places of work.
The Welisizwe Rural Bridges Programme is implemented between the DPWI, the Department of Defence and provincial Transport and Public Works Departments.
A number of bridges have been installed in the Eastern Cape and KwaZulu Natal in the past two years. Four bridges have been completed in the Eastern Cape and 12 in KZN.
The Department of Defence has a capacity to deliver 95 bridges per year, hence the announcement by the President at SONA to upscale the programme by 95 bridges per year and we look forward to the budget speech by the Minister of Finance to confirm the funding to enable the delivery of 95 bridges for the new financial year.
Given the pending committed of budget from National Treasury, the Welisizwe bridges will be up scaled and rolled out in six provinces namely, Mpumalanga, the Eastern Cape, KwaZulu Natal, Free State, Limpopo and North West) in the 2022/23 financial year.
This programme is has also been instrumental in providing jobs and on-the-job training to qualified artisans and professionals in the department.
The DPWI is in the process of recruiting 360 Qualified Artisans, 300 Artisan Trainees and Engineering Trainees from the participating provinces for Welisizwe Programme. Some these trainees are already in the Department.
The recruitment process will concluded by the 31 March 2022. EPWP participants will be recruited from the community where the bridge is constructed.
SIP 28: PV and Water Savings on Government Building Programme (Integrated Renewable Energy and Resource Efficiency Programme – iREREP)
On 20 September 2021, I announced the opening of the Request for Information (RFI) process for the Integrated Renewable Energy and Resource Efficiency Programme (iREREP) to test the market for ideas which comprehensively looks at ways to deliver mutual value through strong partnerships across Government and the private sector.
The RFI process for ideas from the market opened on 20 September and by the closing date on 27 October, 58 submissions had been received.
We are now drawing up the specifications and the Request for Proposals (RFP) will go out in the first quarter of the new financial year.
Also known as the Photovoltaic (PV) and Water Savings on Government Buildings Programme (SIP28), this project was also gazetted as SIP 28.
The programme will be the largest programme for the procurement of renewable energy and resource efficiency for public facilities.
The DPWI as the largest landlord and facilities manager in the country, has a responsibility to not only deliver and manage quality infrastructure but to combat climate change and sustainable development through its mandate – such as providing buildings for government service delivery.
Recent studies places annual electricity and water consumption at an estimated 4021 Gigawatt hours 39 million kilolitres respectively.
SIP 26: Rural Roads Programme
The South African road network is estimated at a total of 750 000km, the 10th longest road network internationally. This is a combination of both paved and unpaved roads.
Of the 750 000km, approximately 592 000km is gravel (unpaved). The backlog of upgrading the entire gravel road network in South Africa amounts to R5.3 Trillion.
There is a need to incorporate labour-intensive methods in the designs of the gravel roads upgrades projects in order to create jobs and decrease the unemployment rate South Africa is faced with.
We aim to upgrade at least 50% of rural roads in the next three years using block paving. The bricks used in the upgrading and maintenance of these rural roads will be sourced from local suppliers.
The rural roads programme will cover mostly the rural provinces of the Eastern Cape, KwaZulu-Natal, Mpumalanga, Limpopo, North West and the Free State. ISA and the National Department of Transport continue to work together with provinces to the rural roads to be upgraded.
Refurbish Operate and Transfer Strategy
DPWI is also the owner of many unutilised buildings and assets and in order to reduce the cost of letting in buildings from the private sector for use by government departments, we are now going to use more government buildings for government departments.
The methodology we are going to use is that we have come up with the Refurbish Operate and Transfer Strategy. We will start a pilot for five buildings bringing the private sector on board to do a proof of concept on five buildings.
The private sector will put in the resources to refurbish and repair the buildings and repurpose them for office space for government.
Also as part of the ROT strategy, it will also include repairs and maintenance. In return government will lease the buildings to the private sector for a long term period but for use by government departments.
We will also be packaging another 200 buildings for the same purpose that will go out to the market in the next financial year.
Dr Kgosientsho Ramokgopa: Funding
As a recap, the Sustainable Infrastructure Development Symposium of South Africa, which was launched in 2020 identified a large number of projects of which 50 was gazetted as earlier mentioned by Minister de Lille.
29 of the 50 projects are either completed or in implementation to the value of R119 billion out of the R340 billion as announced during the SIDSSA of 2021.
During the SIDSSA 2021 in October, an additional 55 projects were showcased with a total investment value required of R595 billion with an investment gap of R441 billion.
40% of these projects are still in Preparation stages.
Infrastructure South Africa is working closely with the Project Sponsors and the Provinces in providing technical support to the project owners to accelerate the projects through the preparation stage to an investment ready and bankable project.
The implementation of some of these projects are due to the lack of adequate bulk infrastructure which is curbing private sector investments.
As such, and as mentioned by the President in his SONA, government will be providing fiscal support to finance bulk infrastructure that will enable key catalytic private sector projects.
An initial fiscal injection of R1.8bn will be made available unlock to support seven private sector projects to the value of R133 billion.
These are brownfield projects which include the N2 Nodal Development in the Nelson Mandela Bay Municipality and the Keystone Industrial Park in eThekwini. These 7 projects have jobs promise of approximately 344 000 direct quality jobs.
Social infrastructure delivery mechanism
President Ramaphosa also made reference to government introducing an innovative social infrastructure delivery mechanism to address issues that afflict the delivery of school infrastructure.
The mechanism will address the speed, financing and funding, quality of delivery, mass employment and maintenance. The new delivery mechanism will introduce a Special Purpose Vehicle, working with prominent Development Finance Institutions and the private sector, to deliver school education infrastructure.
The pace of delivering social infrastructure is determined by Departments capacity to implement the infrastructure programmes and the availability of funds for implementation. The challenges in implementing social infrastructure can be categorised into four groups:
The funding challenge where the pace of implementation is limited to the available funds.
The new delivery mechanism will introduce a Special Purpose Vehicle, working with prominent country development finance institutions (DFIs), to deliver school education infrastructure with the Northern Cape and Eastern Cape Provinces being the pilots.
The Eastern Cape has 61 Schools ready for construction at a cost of R3.7bn while the Northern Cape requires approximately R2.1bn to develop 28 schools. This innovative programme initiative will seek to create a private sector supported fund to accelerate school infrastructure roll-out across the country.
Minister de Lille
Those are the updates in terms of the Infrastructure Investment Plan SIPS and as mentioned earlier, Dr Ramokgopa and I, along with other Ministers and stakeholders will be visiting many of these projects throughout the year to show progress.
I will now turn to some other key issues mentioned in the SONA which fall within the ambit of DPWI:
Land Releases for Land Reform Programme
The DPWI as the custodian of many parcels of state-owned land is also a key department in government’s land reform programme and is often requested to release land for human settlements development, land tenure, land restitution and redistribution.
President Ramaphosa made reference to DPWI releasing just over 14 000 hectares of human settlements development purposes.
This was in line with a Cabinet Memorandum of 2019 which identified 14 000 hectares of land under the custodianship of the Department of Public Works and Infrastructure (DPWI).
I can report on those 14 000 hectares as follows:
Land Releases for the Land Reform Programme
GBVF Shelter Properties
In addition, with regards to DPWI’s contribution to the fight against Gender-Based Violence and Femicide, the department has since 2019, released 12 properties for use as shelters for victims of GBV. Six in the Western Cape, two in Johannesburg and four in Pretoria have been handed to the National or Provincial departments of social development and are being used as shelters to provide a safe haven to abused women and children.
We are finalising work with the Department of Social Development (DSD) on 14 other properties in the Northern Cape, KwaZulu Natal and Mpumalanga to be refurbished and handed over for GBVF shelters.
Parliament Fire Independent Assessment
Just over a week ago, I issued a statement with regard the Coega Development Corporation which was appointed by DPWI to conduct an independent assessment of the fire damage at Parliament.
National Treasury assisted the department to expedite the process to procure the independent specialist engineering team as expeditiously as possible and COEGA was appointed on Friday 11 February 2022.
Following the DPWI Engineering Services’ recommendation that specialised structural engineering assessment work be undertaken in order for the buildings to be made safe for access, a scope of works was generated from the DPWI’s Engineering Services team for this work.
The scope of work for the assessment by COEGA includes:
Deliverables:
COEGA has delivered their initial assessment report which revealed the following:
Red zones are severely damaged “no-go” zones which may not be accessed by SAPS teams.
Coega’s detailed assessment report will be communicated to the media and public as soon as it has been finalised and will include:
Debt owed to DPWI and DPWI amounts owed to municipalities
Over the past few weeks, there is has been a lot said and reported on government debt owed to municipalities specifically the City of Tshwane (CoT) with their campaign to switch off services to government buildings. The DPWI Chief Financial Officer and his team have been engaging with all municipalities for some time on an ongoing basis to resolve all payment matters.
According to the latest age analysis that was received by City of Tshwane (CoT), a total amount of R82m was reported to be outstanding, with R77m current and within 30 days and R53m more than 60 days.
The DPWI has processed payments to the value R464 million to CoT since April 2021 to date in line with the invoices received for this period.
This is a demonstration that the department remains committed to paying all verified invoices on time.
The disconnections of services experience by our client departments were as a result of private landlords that are not paying the municipality for the services, rates and taxes due.
The issue of private landlords not paying for municipal services in buildings leased for government departments affected two landlords mainly.
One of these landlords had credit with the city and they were able to arrange set-offs against those credits to ensure that services were restored.
Through the department’s interaction with CoT, we were provided with the individual invoices for cases that were disconnected and managed to process payments for leased buildings.
All other landlords have managed to settle their own accounts with the City of Tshwane. It must be noted that the CoT has not disconnected any state owned building to date. This confirms the effort the department is putting in paying all service providers including the CoT where the accounts are in the name of the DPWI. Over and above mentioned, the department has paid R1.5 billion and R2.3 billion in property rates and municipal services respectively directly to municipalities in the current financial year (2021/22).
Some of the known disputes that are still being addressed with municipalities through constant engagements are as follows:
In relation to Eskom, as at 31 January 2022, the department received an age analysis with a total outstanding amount R13.6 million and R10.4 million for large and small power users respectively. The department has paid R417 million to Eskom since April 2021 to date.
In terms of municipal and electricity payments, the DPWI pays these accounts on behalf of all government departments to municipalities and Eskom and other government departments then have to reimburse DPWI for these payments.
As at 31 January 2022, the total debt owed to DPWI by client departments is R9 205 billion. The top 15 client departments owe 98% of the total debt. Included in the total debt is R4.703 billion relating to disputes.
To expedite the recovery of debt and to resolve the payment issues, the following actions are taken by DPWI:
Members of the media, those are some of the key updates we can provide at this stage and we will continue to conduct site visits and host media briefings throughout the year to update you on progress and I urge media houses to join those visits to see progress on infrastructure projects and the job creation first hand.
Thank you and God Bless.
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