Feb 07, 2014
Infrastructure Bill’s aims embraced, but questions raised about its proposed methodsBack
Construction|Africa|Economic Development|Education|Norton Rose Fulbright|PROJECT|Projects|Resources|Training|Africa|Authorisation Applications|Law|Legal Tools|Services|Environmental|Andrew Robinson|Busa|Claire Tucker|Ebrahim Patel|Infrastructure|Kgatlaki Ngoasheng|Pietman Roos|Salga|South Africa
© Reuse this
The Bill effectively seeks to empower the Presidential Infrastructure Coordinating Committee (PICC) to designate so-called Strategic Integrated Projects (Sips). Its objectives include identifying and implementing Sips of economic or social importance, or which facilitate regional economic integration, and ensuring that infrastructure development is given priority in planning, approval and during implementation.
“The Bill may be regarded as a ‘facilitation’ Bill, as it aims to provide legislative structure for government’s goal of focusing on infrastructure development and of providing a source of work, as well as the necessary facilities to prevent conflicting projects being pursued,” says law firm Norton Rose Fulbright director Andrew Robinson.
The idea is to create steering committees to provide technical support and oversight, and institute procedures to ensure that infrastructure development is not undertaken in a transactional manner, but in an integrated and consistent man- ner. It also intends to advance national development goals, including local industrialisation, skills development, job creation, youth employ- ment, small-business and cooperative development, broad-based black economic empowerment and regional economic integration.
“The Bill enables Sips to be designated through the National Development Plan (NDP). Sips combine hundreds of separate construction projects to enable better integration of connected projects and improve the management of infrastructure during all life-cycle phases,” Patel avers.
“This Bill acknowledges the many weaknesses and challenges we face in implementation, but provides the legal tools to overcome them so that we can do more to achieve our national goals,” he adds.
The idea is to provide a long-term planning framework for infrastructure that extends beyond the work of a single administration.
“This ensures that we move beyond the stop-start pattern of infrastructure; it also enables universities and tertiary colleges to produce the skills that will be needed for the next 20 to 30 years and it gives investors the certainty that they need to commit to long-term investment in the domestic economy,” Patel says.
But, while business and civil organisations support the intentions of the Bill to put a cap on the delays in infrastructure projects and to integrate planning, they question the Bill’s adherence to existing legislation and regulations, including environmental-assessment regulations and public management legislation, besides others.
“Acknowledging that the current authorisation processes are a constraint on development, which, therefore, need to be addressed, is welcomed. However, a key question is why the relevant legislation cannot be implemented in a more efficient manner, instead of introducing additional layers of bureaucracy, which is what the Bill appears to do,” Busa economic policy adviser Dr Laurraine Lötter and economic policy director Kgatlaki Ngoasheng assert.
The Bill assumes that all authorisation applications for infrastructure projects can be submitted simultaneously, but this is not practical, as some depend on prior authorisations for the projects, while no provisions are made for the rejection of applications, they warn.
Further, conflicting policy considerations are lumped together, such as infrastructure development, economic transformation, local procurement, community development and education. These broad objectives may make the smooth implementation and development of Sips difficult and will lead to the projects becoming increasingly expensive, says South African Chamber of Commerce and Industry policy consultant Pietman Roos.
“Particular care must be taken in sectors where there are private and public investors – it is important that the Bill, with regard to the promotion and protection of investment, guarantee equal treatment for foreign and domestic investors, in addition to the same approaches being adopted for public and private investments,” say Ngoasheng and Lötter.
“The Bill must also ensure that implementation does not risk diverting scarce resources for approval processes to focus on public projects.”
While legal experts aver that the Bill does not seem to aim for the regulation of private-sector projects, business organisations call for the clari- fication of the Bill’s impact on private-sector projects in the areas where Sips will take place and for the removal of specific clauses in the Bill that cause uncertainty in this regard.
The explanatory memorandum confirms the intention to restrict the Bill’s application to the implementation of public projects, but this position is not sustained, as a list of Sips includes private-sector projects, and Schedule 1 of Section 7 includes a wide range of potential private-sector projects, says Busa.
The organisation calls for the removal of Schedule 1, “which is a significant cause of con- fusion”, the inclusion of a clear process to develop the NDP and designate projects, and a clarification of the provision for the exploitation of synergies with private-sector projects.
“At this stage, the perception of the Bill is that government aims to intervene in or regulate private-sector infrastructure projects. This causes uncertainty for investors and may reduce investment,” says Roos.
“The steering committee seems to be the key structure, as it is this body that will determine the role any private-sector interest will play where a Sip is to be built or operated by the private sector,” says Robinson.
The steering committees must identify opportunities for localisation, including local job creation and the local procurement of goods and services, to ensure that the Sip contributes to the objectives of the Act and the NDP, the Bill states.
Localisation targets may inflate project costs and increase delays, as local training and skills development will have to be done to ensure adherence to civil construction regulations and other relevant regulations, such as fiduciary and environmental regulations, says Roos.
The Bill contains clear mechanisms to avoid conflicts of interest between decision-makers and the underlying projects as part of government’s anticorruption drive. It provides for tough penalties for corruption, including imprisonment for up to five years, says Patel.
However, it is unclear how the Bill’s intention to align and dedicate ‘capabilities and resources’ will be achieved in municipal spaces outside municipal Integrated Development Plans (IDPs) and budgeting processes. The Bill should rather assist municipalities to implement their IDPs, where Sips are included, as opposed to creating an additional layer of bureaucracy, says the South African Local Government Association (Salga).
“Most of the objects of the Bill can be accommodated within initiatives that strengthen the capacity of municipalities to prepare and implement their IDPs. The Bill should focus on how development of infrastructure that is identified as strategic infrastructure can be accelerated within the existing legislative framework, such as the National Environmental Management Act (107 of 1998) and the recently promulgated Spatial Planning and Land Use Management Act (16 of 2013).”
Such an approach will ensure that the assessments and approvals of Sips are not undertaken in a manner that subverts the role of other organs of State or undermines the sustainability of the Sips, says Salga.
Further, no specific mention is made of public– private partnerships, but these partnerships may be determined by the steering committees using the powers conferred on them by Section 14 of the Bill, notes Robinson.
While it is positive that government has acknowledged the difficulty of implementing infrastructure projects, it must address the broader question of what it foresees for the economy and whether this would include government direction of infrastructure projects or whether it would tap private-sector capabili- ties to accelerate the delivery of the projects, highlights Roos.
“To the extent that existing legislation is believed to stand in the way of implementing Sips, this legislation should be amended to clear the way for these projects. The vague, broad-brush approach suggested for this in the Bill is likely to lead to more disputes than what it avoids,” she says.
While the Bill makes it clear that the relevant accounting officer, government department or agency remains accountable, it does have the potential to create conflicts between the steering committee and the fiduciary and accounting responsibilities of the accounting officer or authority, as stipulated in the Public Finance Management Act No 1 of 1999.
“In particular, it is difficult to see how Section 12 of the Bill will be implemented in practice. It gives a member of the steering committee the ‘authority to make decisions on behalf of the organ of State he or she repre- sents’. Such decisions may have financial consequences and seem to flaunt established financial and procurement rules, for example, by National Treasury for proper financial controls,” she concludes.
Patel has given the assurance that he and his department are taking account of the 30 submissions that have been made on the Bill and has promised that changes are being introduced to strengthen its constitutionality and reduce ambiguity.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines (150 word limit)
Other Water News
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
Today’s organisations execute projects within increasingly complex environments – particularly in the engineering sector. The ability to successfully execute these projects is what drives the realisation of successful projects and, ultimately, the achievement of...
South Africa’s distribution grid is a twentieth-century relic, which must be changed to serve the country’s modern electricity needs, says South African National Energy Development Institute (Sanedi) Smart Grid Programme manager Dr Minnesh Bipath. “What we are...
There is a disparity in government funding provided to integrated transport networks – bus rapid transit (BRT) networks ¬¬– and that given to conventional bus services, says Putco executive director Thys Heyns. “We have neglected and strangled conventional bus...
The Johannesburg Social Housing Company (Joshco) is building 502 rental housing units, valued at R200-million, in Dobsonville, Soweto, which are scheduled for completion in June 2016.
Automotive component manufacturer and distributor Metair is centralising its research and development (R&D) work in Turkey, in an attempt to bolster the company’s ability to produce affordable start/stop batteries. The new R&D centre is part of an expansion plan in...