FS GROUP 2022-2031 BUSINESS PLAN: 190 BILLION FOR SUSTAINABLE DEVELOPMENT OF INFRASTRUCTURE AND MOBILITY AT THE SERVICE OF THE COUNTRY

  • Presented in Rome by Chairwoman Nicoletta Giadrossi and CEO Luigi Ferraris
  • Redefinition of the governance and new organisational set-up of the subsidiaries aggregated into four business hubs: “Infrastructure”, “Passengers”, “Logistics”, “Urban”
  • Enabling factors of the plan: innovation, digitisation and connectivity, development of people
  • Strategic initiatives to increase the degree of energy autonomy and sole control over international activities
  • Around 40,000 hires expected over the course of the plan
  • Kick-off of the “Un Tempo Nuovo” institutional campaign, marking the beginning of a new era, complex and full of promise
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KZN flooding a wake-up call for resilient infrastructure

The catastrophic flooding in KwaZulu-Natal is a wake-up call for local and national government to ensure that future urban development is integrated and resilient to extreme weather events. “The effects are widespread, and I do not think anyone has a proper handle yet on the extent of the infrastructure damage. There is a long road ahead to fix this,” says Darrin Green, MD Africa at global trusted infrastructure consulting firm AECOM.

Parts of KwaZulu-Natal received over 300mm of rainfall in a 24-hour period from 11 to 12 April, and close to 400mm, including the preceding rain in the days leading up to the floods. “It was a 100-year rainfall event for some areas. That is just in terms of the rainfall itself, which cannot be correlated directly with the flooding. Once everything is saturated, the runoff is much higher. Then there is the secondary impact of landslides and erosion that can change the natural runoff characteristics, resulting in unpredictable impacts that can cause further significant damage to infrastructure,” explains Timothy Hotchkiss, an engineer at AECOM’s Durban office specialising in flood management and the design of water-related infrastructure.

While the entire province was impacted, the worse-hit areas were the eThekwini Metropolitan Municipality and the districts of iLembe, Ugu, King Cetshwayo, and uMgungundlovu. Informal settlements close to rivers and waterways were severely affected, with numerous dwellings swept away and nearly 450 lives lost to date. The flooding disrupted fuel and food supplies.

The torrential rain caused extensive damage to houses, businesses, roads, bridges and water, electricity, rail, and telecommunications infrastructure. Cabinet declared a national state of disaster on 19 April. KwaZulu-Natal Premier Sihle Zikalala estimates it will cost about R5.6 billion to repair the damage to road infrastructure alone. While Durban Port, one of the largest and busiest shipping terminals on the continent, has since reopened, there is a massive backlog of 8 000 to 9 000 containers.

“We will be involved with a lot of the repair and rebuild work, especially in terms of bulk infrastructure such as roads and water networks,” notes Hotchkiss. The company has carried out flood mitigation work for a major automotive manufacturer in the region in conjunction with the metro.

“While eThekwini is proactive from a catchment planning perspective, there are still many challenges, and this event was really way beyond what could have reasonably been planned for,” says Hotchkiss. “For us as AECOM, it is important to take a holistic view of the flooding in terms of its social and environmental impact.”

It is clear from the extent of the damage that properly planned areas, and areas with well-maintained indigenous vegetation, fared much better than areas where there is a lot of uncontrolled development. A lack of integrated planning in terms of electricity, water, transportation networks and stormwater drainage means that the impact of any extreme weather event is likely to be that much greater.

“It is a countrywide issue. There is very little holistic planning around any of these critical factors. Unfortunately, this has contributed significantly to what we have seen happen in KwaZulu-Natal. We are paying the price for years of under-planning and a lack of investment in maintenance and infrastructure,” says Green.

The immediate priority is to ensure that the water supply in eThekwini is fully restored, followed by the electricity and road networks. In some cases, the authorities have consultants and contractors on frameworks and term tenders, and therefore may be able to respond relatively quickly to some of the immediate and less complicated infrastructure repairs. However, on the whole, emergency procurement will need to be put in place. “We have seen before that this does not always have the desired outcomes. We need to mobilise as quickly and as effectively as possible,” says Green. Consulting Engineers South Africa (CESA) has stated that its members are on standby to provide any assistance required.

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Effective implementation of PPPs is critical to address infrastructure deficit in Africa

By Teddy Daka, Co-CEO, Zutari

The African Union (AU) has noted the clear impact of infrastructure deficits on African competitiveness, recognising this as “a continental problem that requires a continental solution”

Regional integration through infrastructure programmes is expected to overcome constraints imposed by scale and location, and improve the competitiveness of African producers, connecting consumers and enhancing intra- and inter-regional trade.

African leaders have consistently expressed their desire to support Africa’s economic development through a common market for goods and services. A 2016 report by McKinsey projects that Africa’s manufacturing “output could expand to nearly $1 trillion” by 2025 if Africa’s manufacturers upscaled to meet domestic consumer and business demands. This will require inter-sectoral collaboration between business and governments to address obstacles to production and exporting of goods.

Recognising these and other market opportunities, aspirations for Africa’s development have begun to translate into policy-making: The African Free Trade Agreement underscores regional policy efforts towards this goal; the AU’s Programme for Infrastructure Development (PIDA) is an outcome of a coordinated policy effort to unlock competitive opportunities; and, in South Africa, the recent adoption of the District Development Model shows a localised  shift, mirroring intra-regional policy trends.

While much research, advocacy and institutional work is ongoing towards reshaping African policies to support effective integration, this goal relies on the effective implementation of Public-Private-Partnerships (PPPs) as a mechanism. The PPPs which undertake infrastructure projects unconsciously mediate a social contract between governments and citizens against which to monitor performance.

Our ability to leverage innovative regional development hinges on the translation of infrastructure development practices across the entire development process. It is clear that infrastructure delivery – and the quality of leadership, governance and public-private cooperation required for its development – both exist as grand challenges in their own right and underpin the interventions necessary for many others.

As Africa joins the global effort to attract funding from large global institutional investment vehicles, its ambitions are being matched through more integrated policy making, redesigned finance instruments and project execution practices and project information systems that support performance monitoring.

For visions of shared prosperity, regional integration and intra-continental strengthening to translate from policy through to development practices (across the value chain), and service delivery performance, calls for embodying a developmental identity and embedding an innovative mindset at multiple levels throughout the sector and across the infrastructure delivery value chain.

We are pushed to be resourceful, intelligent and wise; we are required to be adaptive, to develop our talents, our capacity; and we certainly need to cultivate the motivation and commitment to see through this multi-generational task.

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No More Slide for Construction and Unemployment: Infrastructure Investment Plan in Full Swing

Minister Patricia De Lille and Dr Kgosientsho Ramokgopa on Economic Reconstruction and Recovery Plan (ERRP)

22 Feb 2022

Statement by Minister of Public Works and Infrastructure, Patricia De Lille and Head of Infrastructure South Africa, Dr Kgosientsho Ramokgopa

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.

  • For the 2021 Adjustment Budget: Four student housing infrastructure projects delivering 9 500 beds at a cost of over R3 billion was considered. The BFI approved amount was R900million from the Infrastructure Fund over two financial years.
  • For the 2022 Budget, the following projects were considered by the relevant BFI committees:
  • Social Housing Programme (SHP): Total project cost = R1.1 billion. BFI Approved amount R304.5million over the next two financial years from the Infrastructure Fund.
  • Lepelle Northern Water (LNW): Total project cost = R4.5 billion. BFI Approved amount R1.4billion over the next three financial years from the Infrastructure Fund.
     

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:

  • SIP 24c: The Lufhereng Mixed Use development in Soweto,
  • SIP 21 f & g: The N3 Road Upgrades in KwaZulu Natal,
  • SIP 21 b: The Musina Ring Road in Limpopo 
  • SIP 21 m: The Small Harbours Repairs and Maintenance Programme at the 13 proclaimed fishing harbours in the Western Cape such as Hermanus and Saldanha Harbour.

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:

  • SIP 21 a: N1 Windburg Interchange Windburg Station: Free State
  • SIP 21 c: N1 Polokwane Eastern Ring Rd Phase 2: Limpopo
  • SIP 21 d: N1 Ventersburg to Kroonstad: Free State
  • SIP 21 e: N2 Mtunzini Toll Plaza to Empangeni T-Junction: KwaZulu Natal
     

Projects in Construction:

  • SIP 21 b: N1 Musina Ring Road: Limpopo (This project is expected to be launched in the first quarter of 2022)
  • SIP 21 f: N3 Cato Ridge to Dardanelles: KwaZulu Natal
  • SIP 21 g: N3 Dardenelles to Lynnfield Park: KwaZulu Natal
  • SIP 21 j: N3 Ashburton Interchange to Murray Road: KwaZulu Natal

Projects in Procurement stages include:

  • SIP 21 h: N3 Paradise Valley to Mariannhill Toll Plaza: KwaZulu Natal
  • SIP 21 i: N2 Edwin Swales to South of EB Cloete Interchange: KwaZulu Natal
  • SIP 21 k: N3 Mariannhill Toll Plaza to Key Ridge: KwaZulu Natal
  • SIP 21 l: N2 EB Cloete Interchange: KwaZulu Natal
     

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:

  • Kalk Bay
  • Gordons Bay
  • Hermanus
  • Gansbaai
  • Struisbaai
  •  Arniston
  • Lamberts Bay
  • Laaiplek
  • St Helena Bay
  • Saldanha Bay
  • Pepper Bay
  • Hout Bay
  • Stilbaai
     

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.

  • SIP 24 i: Fochville Extension 11 in the West Rand District Municipality, Gauteng. The proposed development will consist of 2,198 residential units, out of which 258 will be Social Housing Units (SHU). This project is expected to create 953 jobs.
  • SIP 24 k: Hospital Street in Mujuba District Municipality, KwaZulu-Natal. The proposed development consists of 53 four-storey building blocks consisting of 1,056 units. This project is expected to create 3384 jobs. Construction activities are currently underway on site, the boundary wall, guard houses, office and refuse building have been completed. 54 platforms have been filled, stormwater, water and sewer reticulation has also been completed.
  • SIP 24 j: Germiston Extension 4 in Ekurhuleni Metropolitan Municipality, Gauteng. The project has planned 201 SHUs to accommodate 601 people. This project is expected to create 847 jobs.
  • SIP 24 m: Kwandokuhle Social Housing Project in Gert Sibande District Municipality, Mpumalanga. The project involves construction of a total of 492 SHUs in Govan Mbeki Local Municipality in the Gert Sibande District Municipality, Mpumalanga province. This project is expected to create 1544 jobs.
  • SIP 24 l: Hull Street Phase 1 in Francis Baard District Municipality, Northern Cape. The Hull Street Social Housing Project envisions delivering a total of 600 SHUs in two phases. This project is expected to create 1152 jobs.
  • SIP 24 p: The Willow Creek Project is located in Ermelo, in the Msukaligwa Local Municipality in the Gert Sibande District Municipality, Mpumalanga province. The project entails the construction of 360 SHUs in the Ermelo Central Business District (CBD). This project is expected to create 1062 jobs
  • SIP 24 o: Sondela Village Phase 2 in Gauteng is now 100% completed, all 177 units have achieved Practical completion. Tenants have moved into 96 units, this equates to 54% of occupancy.
  • SIP 24 r: The Jeppestown Project in Johannesburg is also progressing well at 37% completion rate with 95 units targeted with an estimated 500 job opportunities being created.
  • At Greencreek SIP 24 g, one of the private sector projects gazetted, 3 872 units are targeted with 412 units already constructed and 361 units already occupied. The project is intended to create over 3 000 job opportunities.
  • The Mooikloof Development SIP 24 h is also progressing well.

 
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:

  • SIP 19 a:  Lesotho  Highlands Water Project (Phase 2 (Gauteng/Lesotho): Advance works are under construction. Tender design for the main contracts is complete; award of the main contracts is now dependent on finalising the loan agreements. The project is intended to create around 3 500 jobs during construction.
  • SIP 19 b: Phase 2A of the Mokolo Crocodile River (West) Augmentation Project (Limpopo): Raising of long term debt for the project is underway. The Infrastructure Fund is exploring the possibility to partner with the Trans-Caledon Tunnel Authority (TCTA) to raise R5 billion Standby Credit Facility to credit enhance the debt raising prospects of the transaction. The project is in Procurement and is intended to create approximately 2 000 jobs during the construction period.
  • SIP 19 i: Berg River Voelvlei Augmentation Scheme (BRVAS) (Western Cape): The final draft BRVAS Agreement was circulated to the Users for consideration by the Municipal Councils and Irrigation Boards. Finalisation of the agreement will pave the way for long-term funding. The project is in Procurement with the potential to create approximately 400 jobs during construction phase.
  • Other Water and Sanitation SIPS such as the uMkhomazi Water Project, SIP 19 c is in procurement preparation stage and the Mzimvubu Water Project, SIP 19 f is in the stage one construction phase.

 
Energy Sector Projects: SIP 20

  • The Risk Mitigation Independent Power Producer Procurement Programme (SIP 20a), with an approximate investment value of R50 billion Financial close has been extended to end of March 2021.
  • Local Content was a key qualification criterion with a requirement to demonstrate at least 40% threshold to pass the qualification criteria for the selected preferred bidders. The project is intended to create over 15 000 job opportunities during the operations phase alone.
  • On the Embedded Generation Investment Programme of 400MW (SIP20c), the Development Bank of South Africa (DBSA) has issued a Request for Proposals (RFP) for the programme on the 31st July 2021, with application submissions received by the 30th of September 2021.
  • It is expected that the project can ensure 700 000 tons of emissions per annum reduction in RSA once projects are completed. This forms part of Green House Gas emissions reduction plans.
  • Bid window 5 with an estimated capacity of 2583MW was also recently announced by the Minister of the Department of Mineral Resources and Energy. Financial close is at end of April 2022.


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 capacity to perform integrated planning, stakeholder engagement and management and institutional capacity to implement projects at a large scale. This results in underspending and lack of co-ordination within the department and with stakeholders.
  • Monitoring and evaluation, due to inadequate monitoring and evaluation the department is not able to report accurately on the progress of the programme and this impacts planning, budgeting and coordination.
  • Facility management and maintenance, there has been a huge drive to build new schools however the maintenance of existing infrastructure has been neglected. This will not only impact existing schools but will also have an impact on new builds, if robust maintenance schedule and programme is not implemented and funded.

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:

  • Following a high level verification on the availability of the identified land parcels, it was established that Sixty Three (63) land parcels are currently in use by the Department of Defence (DOD) which constitute of Four (04) Military Bases and 01 land parcel used by SAPS in the Western Cape. The total extent of these land parcels is 556.8805 hectares.
  • The size of the military bases alone amounts to 542 hectares.
  • Of the 14 000 hectares, we have so far approved and issued Special Powers of Attorney for 27 land parcels measuring 2088,8 hectares emanating from the Cabinet Memorandum.
  • A land reform Inter Ministerial Committee (IMC) was convened by the Deputy President on the 26 February 2021 where, the unavailability of some of the aforementioned land parcels was discussed.
  • A resolution was taken for an onsite visit to determine the optimal utilisation of the land parcels allocated to DOD.
  • On 27 February 2021, I undertook an onsite visit to the military bases in Cape Town with the Ministers of Defence: Minister Mapisa Nqakula and Minister of Agriculture, Rural Development and Land Reform, Thoko Didiza.
  • It was decided that a Cabinet Memorandum on the military bases land should be done by Department of Defence to submit to Cabinet to make a decision and we await this Cabinet Memorandum and Cabinet’s decision on the way forward with regard to the military land.
  • A vacant portion of land measuring approximately 36.6756 hectares within the Wingfield Military Base has been identified as possible alternative area for Human Settlements development. Currently, the HDA is in a process of conducting a development feasibility studies.
  • Other Land Releases for human settlements development purposes by DPWI apart from the 14 000 hectares
  • Additionally, 13 land parcels not included in the Cabinet Memorandum measuring 531, 9 hectares have been approved by DPWI and Special Power of Attorney issued to the Housing Development Agency.
  • Therefore, in total between May 2019 and February 2022, DPWI has released
  • 40 land parcels measuring 2620, 7 hectares for the human settlements development. All of these land parcels have been spatially mapped by the HDA in support of the Priority Housing Development Areas.
  • DPWI has also approved the release of land in Stellenbosch measuring 17, 7 hectares in Western  Cape  to  the  Housing  Development  Agency (HDA). This parcel of land and was identified by Passenger Rail Agency of South Africa (PRASA) and the HDA as an alternative land for the relocation and resettlement of communities illegally occupying the rail reserve of the Central line in the Western Cape. The Power of Attorney is in progress of being issued and will be finalised by end of February 2022.
  • I am further committed to approve an additional 21 land parcels measuring 440, 6  hectares  before  the  end  of  the  financial  year  for  human  settlements development purposes.


Land Releases for the Land Reform Programme

  • Since May 2021 to date, DPWI has approved for release 125 properties measuring over 25 500 hectares of agricultural land for redistribution across all nine provinces.
  • Since May 2019 to date, DPWI has released 204 properties totalling over 28 845 hectares in various provinces for restitution purposes.
  • For land tenure, in May 2021 we also handed over 189 hectares of land and title deeds issued to Tafelkop black farmers in Limpopo.


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:

  • Assessment of the fire damaged buildings in the parliamentary precinct to pronounce on the extent of the damage
  • Provide professional advice on the safety of the structures.
  • Provide measures to temporarily make the structure safe to allow the investigations to proceed unhindered
     

Deliverables:

  • Initial Assessment report: Upon completion of the assessment, the service provider is to submit a report within one week of appointment.


COEGA has delivered their initial assessment report which revealed the following:

  • The Coega team has completed the bulk of the preliminary assessment and report on the fire damage to the New National Assembly Building and the Old Assembly Building following the fires of 2 and 3 January 2022.
  • The basement floors of the New Assembly Building are flooded and more inspection work needs to be done in this area.
  • The assessment confirmed that the fire in the National Assembly building caused significant damage to the central structural elements from the 2nd floor up to the 6th floor, but the structural integrity is such that the structure is not vulnerable to collapse.
  • The Coega final structural assessment report has designated 3 zones within the New National Assembly Building. They are designated as Red, Amber and Green Zones. The colours designate areas within the buildings and their status with respect to SAPS access for their imminent investigations.
  • Green zones represent areas which are fairly lightly damaged structurally and which may be accessed almost immediately by a properly inducted SAPS teams following defined safety protocols.
  • Amber zones are badly damaged zones which may be accessed almost immediately by properly inducted SAPS teams following defined safety protocols, provided they are accompanied by a member of the Coega structural team.

 
Red zones are severely damaged “no-go” zones which may not be accessed by SAPS teams.

  • Should the investigation trail render access to specific areas within the “no-go” zones to be very desirable, then the structural engineers will advise on special temporary access structures to be constructed. Where possible, to allow the investigators access, with due regard to safety, without applying loads to the severely compromised parts of the structure.
  • The Coega structural engineers have recommended certain short- to intermediate- term safety measures be put in place to safeguard personnel and certain remaining portions of the structure. These measures are recommended to be put in place after the conclusion of the SAPS investigation.
  • The Coega team is on track to commence with the second phase comprising of the detail assessment to determine the extent of damage for full restoration of the building including providing a cost and time estimate for such works. The latter will commence after the forensic investigations and should take three weeks to conclude.

Coega’s detailed assessment report will be communicated to the media and public as soon as it has been finalised and will include:

  • Detailed assessment report indicating the extent of the damage and any other structural issues.
  • Pronouncement on the residual strength of the structure (including all relevant tests and analysis)
  • Proposed restorative measures with associated cost comparisons for restoration
  • Proposed time estimate of the rehabilitation project
  • Proposed preliminary cost estimate of the rehabilitation project
  • Pronouncement on possible long term restorative measures


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:

  • Non-allocation of payments made to municipalities;
  • Transfer or change ownership on properties from the municipalities to the department; and
  • Disputes over interest charged due to payments not allocated timeously by municipalities;
     

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:

  • Meeting with Top 15 Client Departments that contributes to 98% of the total debt owed
  • Resolve disputes raised by Client Departments;
  • Present to Forum of South African Director Generals (FOSAD) quarterly on non-paying clients;
  • Levy interest on outstanding amounts;
  • Presentation of the required information is done to Clients Departments for shared savings;
  • Continuous follow-ups are made with Client Departments to sign the billing agreement.
     

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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Infrastructure investing within the wider alternative investments ecosystem

Alternative investments include private assets such as Private Equity, Private Credit, Infrastructure Investing, Private Real Estate and Hedge Funds. They are generally complex, and less liquid compared to listed assets. As a result, they typically require a longer-term investment horizon to be able to yield the envisaged social and financial returns. The purpose of this article is to highlight one subset of alternative investments – Infrastructure Investing.

Definition of Infrastructure

“The basic physical structures and systems (e.g., buildings, roads, power supplies, water supplies and communication networks) for the provision of utilities or services and constructed for public use or enjoyment.” – from ASISA Infrastructure Taxonomy

Why Infrastructure Investment is needed

Infrastructure forms the backbone of every economy, enabling economic and social development.” – from The Principles for Responsible Investment (PRI)

Since Infrastructure Development is an integral part of economic growth and development, there’s been a growing body of research on its impact. This research has consistently shown its ability to unlock economic growth, especially in communities that have historically operated without adequate access to basic amenities. Many of these amenities are essential for the efficient production of goods and services, transport and trade – all of which spur economic growth, which in turn helps to reduce poverty.

Infrastructure in South Africa

Within the South African context, the government has historically held the key responsibility for infrastructure development, with infrastructure generally seen as a ‘public good’. Current research shows a significant and widening infrastructure deficit. Recent reports indicate that Gross Fixed Capital Formation as a percentage of GDP hovers around 18%, which is not only materially lower than our emerging market peers, but also significantly below the national target of 30%. Pursuantly, the scale of investment needed to solve our infrastructure deficit dictates that we can no longer rely only on the government to drive this investment class. This is exacerbated by the deteriorating national fiscal position. The private sector should play a much more prominent role in this regard – a role as significant as we continue to see in the successful rollout of REIPPP.

Why Infrastructure Investing is suitable for the retirement industry

It’s an investment in tangible assets that make a positive social and environmental impact without compromising returns.

From a portfolio construction perspective, research shows that infrastructure investments exhibit a low correlation with traditional/vanilla assets such as equities markets and therefore have an innate portfolio diversification benefit.

They are inflation-linked, long-term assets with a lower cash-flow risk compared to traditional investments.

Prescient’s history in the infrastructure space

As a fiduciary asset manager, the products we invest in are an indication of our beliefs, attitude and overall philosophy in terms of sustainability. We create and develop products that are channelled towards advancing various responsible investment and/or ESG-related goals.

One of our ESG-centric products is the Prescient Clean Energy and Infrastructure Debt Fund, which primarily invests in various clean energy projects across the country. It allows us to contribute to the advancement of numerous developmental and sustainable goals while delivering attractive returns. The projects we invest in are aligned with the United Nation’s Sustainable Development Goals, in particular SDG 7 (Ensure access to affordable, reliable, sustainable and modern energy for all) and the Paris Agreement. The Fund was launched in 2015 and has supported 17 clean-energy and infrastructure projects, most of which are operational.

The Fund’s performance has shown that we can make a meaningful difference in the local context without compromising client returns.

Next steps for Prescient

Consistent with our view that infrastructure development is critical in reinvigorating economic development in South Africa, we are in the process of launching our second Clean Energy and Infrastructure Debt Fund, which seeks to support renewable energy and infrastructure projects, primarily through debt funding.

In addition to offering clients access to real assets which aren’t generally available in the market, the Fund will continue to make a meaningful contribution to economic and social development in South Africa, including – but not limited to – the following areas:

  • Improved infrastructure, including access to basic services, water, housing and healthcare.
  • Sustainable energy development.
  • Job creation.
  • Local content and local ownership at project level.

Given the positive ESG screening the Fund will use, along with the expected meaningful impact of the underlying infrastructure projects we’ll be looking to invest in, we believe it to be a Socially Responsible Investment Vehicle.

Specifics of Fund 2:

  • Launch date: 6 September 2021.
  • Open-ended in nature and initially targeting a fund size of R2 billion. To date, we’ve received hard commitments from investors in our existing fund to the tune of R700 million.

Conclusion:

Investment in infrastructure has an incredible ability to unlock economic growth which, in certain cases, can be localised to communities in which projects operate. This not only helps to create jobs, but also to drive SMME development (local content procurement) and an inclusive economy through local ownership.

Prescient Investment Management has a proven track record in the credit/fixed income space and the CEIDF investment team has significant experience across unlisted, project and infrastructure finance areas of expertise. Our blend of a systematic and fundamental investment approach allows us to make appropriate and objective investment decisions, which have enabled us to deliver the returns shown above.

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Minister Patricia De Lille: Public Works And Infrastructure Dept Budget Vote 2021/22

25 May 2021

Our Seventh key priority for the Sixth Administration is a commitment to a better Africa and World.

I believe investing in South Africa’s infrastructure will bring us closer to our continent as we link to our neighbours with new ports of entry, bridges and roads – increasing trade and deepening our links.

But let me report on how the excavators are breaking ground.

Honourable President Cyril Ramaphosa told Parliament in his 2021 State of the Nation Address: “we stand here not to make promises but to report progress in implementing the recovery plan and the priority actions we must take to restore growth and create jobs”.  

I am here to give an honest and frank account of what we have delivered, the problems we face and what we still need to do.

Let me start with infrastructure 

Infrastructure

A year ago this week, on 27 May 2020, the Cabinet approved South Africa’s Infrastructure Investment Plan.

This plan forms a fundamental part of South Africa’s Economic Reconstruction and Recovery Plan.

In the development of the Infrastructure Investment Plan, the Department of Public Works and Infrastructure (DPWI) worked with the Presidency’s Infrastructure and Investment Office to set South Africa on a new path to plan, secure, invest and implement bankable infrastructure projects. 

We are using the Sustainable Infrastructure Development System (SIDS) methodology to assess all infrastructure projects to ensure that they are bankable. 

As a result, infrastructure South Africa (ISA) was created as the single entry point for all infrastructure.

The government’s Infrastructure Investment Plan is implementation driven with immediate, medium and long term action plans.

A total of 50 projects and 12 special projects were identified and gazetted as Strategic Integrated Projects (SIPs) in July 2020.

An infrastructure investment project pipeline in the energy, water, transport, human settlements and telecommunications sectors were identified.

ISA also assessed all the historical infrastructure projects (SIPs 1 to 18) from the Fifth Administration, reviewing their current status in the project life cycle. 

It found:

  • There are 46 projects completed with a portfolio value of  R162 billion
  • 81 projects are at different stages of construction with a portfolio value of  R800 billion
  • There are 22 projects with a portfolio value of R73.1 billion in procurement, and 31 projects with a portfolio value of R215.1 billion at the feasibility stage.
  • 84 projects and programmes on hold with that will be sent back to their project owners advising them that should they wish to resubmit their infrastructure projects following the SIDS methodology.

This report was provided to the Presidential Infrastructure Coordinating Commission Council (PICC) on the 22nd of April. 

ISA visited the three spheres of government as well as State-owned enterprises, visiting every province unblocking catalytic infrastructure projects, including private sector-led projects.

Honourable house chair, when people think of infrastructure, they think of big, “cold” projects, and there is often a disconnect about the importance of infrastructure and its impact on communities. 

Infrastructure is about people having water to drink, having decent roads, and having a bridge to cross to school or work. It helps them connect to the internet so you can find more opportunities and access critical government services like clinics, police station or court. 

Infrastructure is about changing people’s lives for the better. 

In putting people first, DPWI developed a Social Facilitation Methodology and Framework for infrastructure this past year to bring communities closer to every single infrastructure projects. 

This framework was approved by Cabinet earlier this month. 

Social facilitation puts the community at the centre of an infrastructure project. From the outset of the planning process, the implementation, and finally operating and maintaining. 

Honourable house chairperson and Members,

DPWI is developing the National Infrastructure Plan 2045 (NIP 2045). 

This plan will spell out the government’s intentions to build, manage and maintain infrastructure within a unified vision that enables South Africa to grow,  address our inequality and capture our strengths as a nation, within the region and internationally, for the next 24 years.

The NIP2045 will provide investors of a clear picture of our future infrastructure plans.

Sector experts, from business, organised labour, think tanks, State-Owned Entities are all part of drafting the NIP 2045. The draft plan will be presented to Cabinet in June 2021 and soon after gazetted for broader public comment.

Infrastructure fund

Government established the Infrastructure Fund and committed R100billion over a 10 year period. 

To encourage private sector investment in infrastructure, we have established the Infrastructure Investment Committee (IIC) chaired by myself and consisting of members from the public and private sector.

The aim is for the Committee to encourage crowd-in funding from sources alternative to the fiscus.

Some of the projects approved by the committee include:

For the Student Housing Infrastructure Programme, we have allocated around R3.4billion from the Infrastructure Fund 

For the SA Connect Phase 2, we have allocated R20billion

Phase 2A of the Mokolo Crocodile River (West) Augmentation Project in Limpopo, we have approved a R3billion contribution as start-up funding from the Infrastructure Fund 

For the One Stop Border Posts with Zimbabwe, Mozambique, Lesotho, eSwatini and Botswana, we have allocated around R1.5 billion will be allocated from the Infrastructure fund. This will be a public, private partnership.

It is important to note again that these funds from the Infrastructure Fund will be allocated over the next few financial years. 

Honourable chairperson, in seeking solutions to provide more secure border infrastructure, DPWI advertised a request for proposals for borderline infrastructure for the country to deal with fixing the porous border fencing around the country. 

The requests for information closed on 26 April 2021 and this process is aimed at providing borderline solutions for the whole country.

DPWI received 16 bids and the department is currently evaluating the proposals and this is expected to be completed on 15 June 2021.

Thereafter, the various options will be discussed with the Department of Defence to finalise the specifications before going out for tender.

We are exploring using the Built-Operate and Transfer model for this project. 

It is clear ISA, and the Department are playing a pivotal role in unlocking investment in infrastructure. This places us at the forefront of infrastructure delivery.

I now turn to the Budget Vote 13. 

Budget

The Departmental budget allocation over the medium term (three financial years or the Medium -Term Expenditure Framework – MTEF period) is R25.5 billion, and the funding will be spent to meet the 7 Priorities of government an in specific to:

Accelerated infrastructure investment for economic growth   Transform our economy the built environment and enable job creation  Proactively ensure spatial transformation and redress through leveraging state assets And provide a dignified experience for our client departments, the civil servant working in a government building, be it a police officer or nurse and ultimately to every South African that visits a government building.

The Department’s budget allocation for this financial year is R8.3 billion. 

The departmental budget for transfers and subsidies with the inclusion of transfer payments to the Property Management Trading Entity (PMTE) and EPWP is equivalent to R7.3 billion of the total allocation for 2021/22. 

For the 2021/22 financial year, the Department will be disbursing allocations to eligible public bodies in the EPWP for the following sectors: 

R1.18 billion in the 2021/22 financial year in the Infrastructure, Environment & Culture and the Social sectors through the integrated grant incentives for Provinces and Municipalities, with an estimated total number  of 81 850 work opportunities

R1 billion in the 2021/22 financial year for the Non-state Sector Programme, with an estimated  total of  52 189 work opportunities

R414 million in the Social Sector in the 2021/22 financial year for Provinces, with an estimated total of 16 243 work opportunities. 

For the financial year which ended on 31 March 2021, the EPWP has transferred 99.9 per cent of the budget, with R1.8 million being withheld due to non-compliance by provinces.

For the financial year which ended on 31 March 2021, the following demographic targets were achieved in EPWP opportunities:   A total of  69% of EPWP opportunities went to women  42% of opportunities went to youth

And 1% for Persons with Disabilities.

House chairperson, both the Auditor-General of South Africa and Members of the Portfolio Committee in Parliament have raised concerns about the reporting by provinces and municipalities of EPWP.

In 2020/21, the Department conducted a social audit pilot study in the City of Ekurhuleni Metro, Steve Tshwete Local Municipality and Nkangala District Municipality to assess the impact of the EPWP Programme in communities.

Prestige

Under the Prestige programmes for Government functions, state visits and funerals, will reduce from R94 million in 2021/22 to R83 million in 2023/24. 

The Department is continuing to implement austerity measures, mainly for the state functions, hence the decreasing budget over the medium term for this Programme. 

Property Management Trading Entity (PMTE)

The budget allocation for PMTE is R4.2 billion for the 2021/22 financial year. 

The PMTE will also focus on refurbishing and maintaining government buildings in its portfolio and developing 12 small fishing harbours. 

Under the PMTE allocation, an amount of R 945.7 million is allocated to DPWI specific infrastructure projects and is used for: R256 million for used for Land Ports of Entry,  

R116 millions for Dolomite Risk Management where Government buildings that are at risk to collapse because of a dolomite sinkhole and doline problem especially in Gauteng, Mpumalanga, Limpopo, North West, Northern Cape and the northern part of the Free State provinces. 

R23 million is set aside for the retrofitting of facilities that have not catered for people with disabilities,

R20million is projected spend for this financial year for refurbishment to parliamentary villages to ensure that they are compliant 

R35million projected spend in this financial year for refurbishment of the Parliamentary precinct in buildings such as the NCOP, the Marks Buildings, 100 Plein Street and security infrastructure. 

R131.7million on other infrastructure projects such as the Port Elizabeth Eben Donges building: building alterations and refurbishments including Air conditioning and Mechanical installations, the upgrading of 10 Water treatment plants and the upgrading the DPWI regional office in Durban. 

R199 million is for precinct development in cities to support efficient and integrated government planning by grouping Departments that provide similar services. 

Salvokop

As part of integrated planning and development, the Department has completed the Township Establishment to develop Salvokop Precinct mixed-use precinct in Tshwane.

This includes the national offices for 4 government departments, namely; the Department of Correctional Services, the Department of Higher Education and Training, the Department of Social Development and agencies – SASSA and the National Development Agency (NDA) as well as the Department of Home Affairs.

The process for the appointment of a contractor to install bulk and internal services at Salvokop is currently being finalised that will facilitate development Phase 1 constituting 350 000m2 of development of four Government Head Offices.

Four Public-Private Partnerships have been registered and are currently in feasibility and budget approval stages with National Treasury.

PV and water savings on government buildings

DPWI as the landlord for all government buildings consumes a significant amount of electricity and water. An estimated 4021 Gigawatt hours and 39 million kilolitres of water each year. 

This equates to on average R2.4 billion expenditure each year on electricity and on average R1.8 billion each year expenditure on water.

The Department’s PV and Water Savings on the Government Buildings Programme aims to reduce energy consumption by between 22 to 45% over the life of the Programme and reduce water consumption by between 30 to 55%, which will equate to an estimated saving of up to R500billion over 30 years for government.

Further this Programme will reduce carbon emissions by 54.5 mega tonnes.

The Programme was gazetted as a SIP on 24 July 2020, which has enabled it to follow an expedited path.

The Programme has received Treasury Approval 1 for Phase 1 and it has been registered to be implemented in collaboration with the private sector on a full Design, Finance, Build, Operate, Transfer (DFBOT) basis, allowing the Programme to proceed to Phase 2.

Phase 2 entails the implementation and procurement of the Programme. 

The initial parts of this process involve the packaging of projects to be issued as required, including developing financial, technical, and legal components of procurement documents.

The Project Team and Transaction Advisor, together with the Chief Financial Officer have worked with National Treasury on the structuring and governance of the various utilities budgets and are in full agreement on the way forward. 

This will mean that this SIP will be able to go to market in the next few months.

Land reform

House chairperson, the DPWI plays an active role in the Inter-Ministerial Committee (IMC) on Land Reform to fast track land reform.

Just this weekend, I joined the President and Ministers from the Land Reform IMC as we handed over 31 title deeds to black farmers outside Groblersdal in Limpopo.

I want to thank the two members of the portfolio committee who joined us at the hand over event, honourable Samantha Graham-Mare and Honourable Timothy Victor Mashele. 

The Department’s Real Estate Investment Services that champions the work of land reform has been allocated R220 million for this financial year. This branch spent 98% of their budget in the previous financial year.

In the past year: 

  • 2 574 hectares were released for Restitution Programme to the Department of Agriculture, Land Reform and Rural Development (DALRRD) to finalise land transfers to claimants.
  • 52 parcels of land totalling more than 3 000 hectares were released for human settlements. 
  • 125 Parcels agricultural land for land redistribution measuring 25 500 hectares and covering all nine provinces.

Further, in support of infrastructure development, 15 hectares or 11 land parcels were approved for registration of roads, water, electricity and gas pipeline servitudes.

In the 2021/22 financial year, the Department plans to release; 21 132 hectares for land restitution,   10 951 hectares for Human Settlements  and 180 hectares for other socio-economic purposes.

The Department also has an extensive Property portfolio comprising 29 041 land parcels and 81 573 buildings – a total of 9 736 are vacant parcels of land ready to support the spatial transformation of our cities and towns.

The Real Estate Registry and Information Services is responsible for the Department’s Immovable Asset Register, and it will receive R62 million in the current financial year. 

National Treasury is currently assisting DPWI to draw up the specifications to digitise the immovable asset register.

We are planning a conduct a proof of concept to transfer the immovable asset register onto a block chain platform to enhance transparency and the credibility of the asset register.

The Immovable Asset Register (IAR) is the core tool that DPWI can use to sweat the assets of the state, drive investment in infrastructure and bring about social and spatial justice. 

House chairperson for this financial year, the allocation for the Real Estate Management Services Branch is R11.2 billion that will be spent on Leases, Property Rates and Municipal Services. 

GBVF 

Through its Real Estate Management, the department has identified 83 properties in the past year to be allocated for use as shelters for victims of gender-based violence.

Together with the Department of Social Development, we inspected 83 properties, and 30 properties were selected to be used by the Department of Social Development as shelters or support centres for people affected by GBVF.

During the previous financial year, 12 properties were allocated to Social Development; six were in the Western Cape and six in the Gauteng Province.

In this financial year, the Department will prepare and release more properties across the country for Social Development to utilise in the fight against GBVF.

As DPWI, we have requested provinces and municipalities who also own buildings to also release some of their own buildings for GBV purposes and not only wait for DPWI to do so. 

The Department’s Facilities Management Branch will be doing repair and maintenance (preventative and reactive) on state-owned buildings received an allocation of R3.9 billion for the current year to maintain the entity’s portfolio of properties. 

The Department has enhanced its strategy in reducing reactive maintenance by putting in place preventative contracts through Total Facilities Management and Term Contracts. 

The Department has awarded 76% of these contracts to previously disadvantaged groups, further disaggregated to 37% to women and 17% to youth. 

Construction property management

The Departments Construction Project Management Branch received an allocation of R5 billion for the current year. The CPM branch only managed to spend 69% of their allocated budget in the prior year. 

The reasons for the underspending are mainly due to poor management contract management, poor cash-flows from the contractors that led to inadequate material supplies on sites and negatively impacted the delivery of milestones. 

In addition, the Covid-19 pandemic required the temporary closure of sites that hurt site productivity, including the mandatory reduction of the workforce to accommodate social distancing. 

These led to under-performance on the infrastructure budget where projects were not executed as planned and spending did not occur as projected.

In mitigation, the Department has established a panel of contractors that will be utilised in an instance where a contractor has been terminated due to poor performance or any other justifiable reason. 

This will save money as a significant amount is usually spent on assisting a non-performing contractor or appointing a replacement contractor. There will therefore be less impact on construction periods and expenditure on projects. 

Measures have also put in place to monitor the Procurement Plan to ensure that projects are firstly packaged correctly and ready for the procurement process and secondly that they are awarded timeously and lastly to ensure that the budget is allocated to those projects that can be delivered.

Supply chain management

In terms of the 30% sub-contracting requirement, during the past financial year, the Department awarded 15 tenders above R30million worth R836 million and sub-contracted 30% to designated groups to the value of R251 million.

The Department is also exploring a proof of concept for the use of Block chain technology within SCM.  A proof of concept has been registered with National Treasury.  

The Department piloted the implementation of the opening of its bid adjudication processes for public observation in the past financial year. 

Every tender advertisement also includes notification of public observation in the bid adjudication process.  

As DPWI improves its Supply Chain Management, it is critical to pay our service providers within 30 days as the law requires.

Delayed payment can often lead to bankruptcy of entrepreneurs, especially SMMEs trying to break their way into the built environment or construction industry.

As of end-March 2021, 92% of invoices received by PMTE were processed within 30 days of receipt, while 96% of invoices in the Department’s Main Account were processed within 30 days.

This demonstrates the commendable work that the Department is doing. 

In instances where officials have been found to have transgressed the requirements to pay service providers and suppliers on time, disciplinary actions are recommended against such officials.

In the financial year ended 31 March 2021, the Department’s Main Account made 281 referrals to Labour Relations for consequence management against officials.

In PMTE, consequence management was recommended against 143 officials.

Corruption

As the honourable President Ramaphosa said in his 2021 SONA: “Corruption is one of the greatest impediments to the country’s growth and development.”

Corruption steals from the poor. 

Yesterday, together with the Head of the Special Investigating Unit, Advocate Andy Mothibi and civil society members we launched the newly established Infrastructure Built Anti-Corruption Forum. 

This forum made up of representatives from the public sector, government entities, civil society and law enforcement agencies such as the Hawks and the National Prosecuting Authority and aims to collaborate on and coordinate anti-corruption initiatives in the infrastructure built environment.

The aim is to address vulnerabilities through forensic investigation, criminal prosecution, recovering losses, proactively preventing future losses in the sector.

Since 2010 to date, the Special Investigations Unit (SIU) had investigated 6 796 matters in terms of four Presidential Proclamations. 6 468 matters were finalised, and 328 cases are pending. 

In addition, the SIU is seeking to recover R1.4 billion in losses suffered by the Department as a consequence of a series of irregularities relating to transactions entered into by the Department with service providers. 

To date, R129 million has been recovered from landlords who overcharged the department for rentals.

In addition, the SIU has referred 197 criminal referrals relating to misrepresentation and fraud to law enforcement agencies for prosecution.

House chairperson, the Nkandla matter is also still before the Pietermaritzburg High Court.

In the civil matter, the parties have applied for a new trial date. They are anticipating that the case will be heard in August 2021. 

The criminal cases are managed by the SIU, which has referred to four matters for criminal prosecution. 

Policy

I want to provide Parliament with an update on the Department’s policy priorities during this financial year. 

The Expropriation Bill was introduced in Parliament in October 2020, and the Parliamentary processes are currently underway, including public hearings and oral presentations in all provinces.

The Department plans to introduce the Public Works General Laws Amendment and Repeal Bill to Parliament in the 2021/22 financial year. 

In addition, we are currently developing the Construction Industry Development Board (CIDB) Act Amendment Bill, and this legislation will be introduced to Parliament during this financial year. The draft Public Works Bill will be gazetted for public comment during this financial year. 

DPWI will also publish regulations for both the Infrastructure Development Act (IDA) and the Government Immovable Asset Management Act (GIAMA) this financial year.

Rural bridges

House chairperson, one of the key projects making a lifesaving and significant impact for our most vulnerable communities in rural communities, especially in the Eastern Cape, KwaZulu Natal is the Welisizwe Bridges Project. 

Three other provinces: Limpopo, Free State and North West, have expressed a keen interest in the implementation of the Programme.  

Working together with the Eastern Cape Department of Transport and Department of Defence, 10 Bridges were completed in the Eastern Cape and a further 20 bridges are scheduled for installation in this financial year.

In KwaZulu-Natal, working together with the KZN Department of Transport and Department of Defence, 8 Bridges were installed during this past financial year, with a further 6 to be completed by the end of this month. In addition 20 further bridges are scheduled for installation in this financial year.

Small harbours

The Department contributes to Operation Phakisa: Oceans Economy through the Small Harbours and State Coastal Property Development programme. 

The Department has spent R500 Million to repair and maintain the Proclaimed Fishing Harbours in the Western Cape.

Thus far, the entire Programme has created 672 jobs and empowered local SMME companies to a value of over R61 million.

The Programme is expected to reach culmination by March 2022, bringing the existing harbours to an 80% operational efficiency.

In the quest for the development of new harbours, the Department is finalising the in-kind grant from the Chinese government to conduct feasibility studies along the coastlines of the Northern Cape, Eastern Cape and KwaZulu Natal.

House chairperson, members from the above it is clear that there is a lot of work for DPWI to do especially in the delivery of infrastructure that will improve the lives of all South Africans especially the most vulnerable. 

The Deputy Minister and I are determined to lead and drive a greater level of urgency in DPWI to ensure that we deliver to the people of our country and expedite the implementation of the Infrastructure Investment Plan so as to create the conditions conducive for investment by the private sector which can in turn create more jobs for our people.

Thank You.

Courtesy: www.gov.za

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SA could cut planned infrastructure budget by addressing billions of litres of wasted water

Water waste, leaks, and the use of drinking water for manufacturing is resulting in billions of litres of potable water going to waste, which – if addressed – could reduce the water infrastructure spend that is necessary.

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AECOM ready to help get R100bn Infrastructure Fund off the ground

AECOM, the global leader in integrated infrastructure, is poised to play a role in potential projects that have significant support from the R100-billion Infrastructure Fund announced by President Cyril Ramaphosa in his State of the Nation Address on 11 February. This is according to Africa MD Darrin Green, who comments that there are opportunities in student housing, digitalisation and water infrastructure – all areas where AECOM has extensive experience and expertise.

President Ramaphosa stated that the Infrastructure Fund will blend resources from the fiscus with financing from the private sector and development institutions. Such partnering between government and the private sector is essential to get these projects off the ground and achieve results. Green notes that the government has also committed R791-billion worth of funding towards infrastructure in the 2021 Medium-Term Expenditure Framework (MTEF). Here efficient procurement is key in terms of the government’s capacity to bring projects to market in a timely fashion.

“We are all aware of the need for sound procurement principles, but real innovative thinking needs to happen so that procurement can be dramatically accelerated to have the necessary impact on the economy – and quickly.”

AECOM Africa MD Darrin Green

He adds that the consulting engineering and construction sector has been in serious difficulty and shrinking for some time, certainly prior to the Covid-19 pandemic, and is steadily losing skills and capacity to support the infrastructure drive. “The emphasis needs to be on fast-track procurement and delivery,” urges Green.

The biggest opportunities in terms of infrastructure in Africa at the moment are: energy (particularly renewables such as hydro, wind and solar power), Environment, Social and Governance (ESG), digital-related infrastructure such as data centres, and basic infrastructure, especially in terms of water management, reuse and sustainability. Capacity and skills remain a challenge, while funding is always a constraint, especially where budgets are being redirected.

Looking ahead, Green predicts that 2021 is likely to be a year of consolidation and adaptation for AECOM. “The vaccine rollout will play a major role in both South Africa and the rest of Africa in terms of bringing back economic activity and confidence. The consulting engineering industry is key to economic recovery, being second in the supply chain after government and client procurement.”

On the international front, AECOM recently announced its ‘Think and Act Globally’ strategy to extend its industry-leading, global expertise to each of its projects around the world, transforming the way it delivers work through technology and digital platforms, and enhance its position as a leading ESG company.

Green highlights that this strategy is having a major impact in providing access to in-house subject matter experts around the world. “We now have prioritised time to talk with our global counterparts and share our expertise, opening up our knowledge networks exponentially. Also, as our digital communication tools utilisation becomes mainstream, accessing this network remotely has never been simpler, allowing innovative new client solutions to be shared quickly and efficiently.”

Here the focus is increasingly on digitalisation and innovation. “We certainly see these trends accelerating, and perhaps more so in Africa, where innovation and digital technology can leapfrog and bridge the relative absence of hard infrastructure,” notes Green. AECOM is spearheading all aspects of digital design tools, including virtual environmental stakeholder digital rooms and virtual whiteboarding tools for client planning sessions in the client interaction and project stakeholder realm. The use of remote sensing, drones and digital tools on-site for streamlining inspection requests, test results and approvals is also becoming more prominent, as with the pilot site at the Polihali Western Access Roads project in Lesotho.

Responding to the ongoing challenge posed by Covid-19 and the altered working landscape, Green stresses the importance of collaboration in meeting clients’ requirements in this difficult time. Face-to-face meetings, for example, have evolved into more complex remote experiences. However, technology tools and platforms are catching up. “The key is flexibility and using digital and physical tools to enhance the client experience in a tangible way through to the delivery of the project. Clients are now more digitally aware; we can provide digital twins for projects once the modelling is complete and work together to have efficient data at our fingertips,” elaborates Green.

“It is important to note that we can leverage AECOM’s world-leading skills for our clients. We can assist in more areas than one might realise – from digital engagement tools to ESG advisory to hard infrastructure and project management and controls. We strive for the flawless delivery of our projects. Considering all environmental impacts is crucial; at the core of what we do is our belief in building sustainable legacies. Sharing our significant internal data and solutions certainly allows us to build on our innovative experiences so that we keep improving and staying ahead of the pack,” concludes Green.

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Increased infrastructure activity needed to boost economy

The decline in manufacturing production, at a time when increased industrial activity is important to revive the ailing economy, is very concerning, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.

SEIFSA Chief Economist Chifipa Mhango said the decline once again highlights the negative impact Covid-19-induced lockdown regulations had on the manufacturing industry and the economy in general, and that this situation needs to reversed urgently. According to figures released by Statistics South Africa (StatsSA), total manufacturing production declined by 3,4% year on year in January, with a slight 0,5% month-on-month increase from December 2020. Total manufacturing sales increased by 1,4% year on year in January 2021 and by 0,9% from December 2020.

However, Mhango welcomed the 5,3% year-on-year increase in January 2021 in the performance of the Metals and Engineering (M&E) sector, which accounts for 29% of manufacturing production. Total sales across the sector’s 13 sub-industries increased by 10,6% to reach R68,3-billion. He said this performance would need to be sustained through the speedy implementation of the Government’s infrastructure plans if the sector and the economy as a whole are to recover.

StatsSA figures also showed that total capacity utilisation in the manufacturing sector was 72,3%, down from 81% in 2019. In the M&E sector, average total capacity utilisation for 2020 was only 68%, again demonstrating how Covid-19 has inhibited production within the sector.

Mhango noted that with the economy has contracted by 7% in 2020, it is imperative that the Government intensifies its efforts to revive the ailing economy and focuses on the implementation of its recovery plans. He said while the Government’s policies were attractive on paper, more needed to be done to speed up the implementation of critical interventions such as the Steel Master Plan in order to benefit both the upstream and downstream of the M&E sector.

Mhango said the current state of the M&E sector remains dire, with declining levels of employment and investment, as well as a weak trading position with the rest of the world. He said with the country’s unemployment rate now at 32,5%, it is important to ensure that the industrial base is not eroded any further. “Fixed investment is key to reviving the sector. To grow the country’s industrial base, the fixed investment share of GDP needs to move to levels above 40%, from the current level where it is below 20%,” he said.

Mhango said while the Government’s commitment to spend R791,2-billion in the next three years on various infrastructure projects is commendable, the slow rate of implementation and the mismanagement of funds have derailed progress towards achieving a higher ratio of fixed investment to GDP.

“The M&E sector is heavily reliant on demand from key Government infrastructure projects to boost its production and sales, especially for products such as steel and other related downstream products such as roofing material. The lack of progress towards the implementation of these projects will only serve as a hinderance to reviving the South African
economy,” Mhango said.

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Gautrain is safe and efficient

The South African green economy vision has identified nine green economy programmes, with sustainable transport infrastructure being one of them.

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