Gauteng Finance MEC Barbara Creecy expressed optimism on Tuesday that the province’s experience in developing a pipeline of blended-finance projects would position it well to tap into the new infrastructure fund being developed by national government.
Delivering a R132.4-billion budget for 2019/20 in the Gauteng Provincial Legislature, Creecy noted that the Gauteng Infrastructure Finance Agency (Gifa) had already developed a portfolio of 20 projects, some of which would seek support from the proposed fund.
Creecy listed the R7.8-billion Kopanong Precinct, as well as the R7-billion Gauteng Schools Project as two large provincial infrastructure initiatives that could benefit from the fund, which President Cyril Ramaphosa unveiled in 2018 as part of a larger Economic Stimulus and Recovery Plan.
Finance Minister Tito Mboweni announced in his 2019 Budget address last month that government would commit R100-billion to the fund over the coming ten years, with R5-billion allocated for the next three years.
The fund, Mboweni said, would accelerate the R526-billion-worth of on-budget projects by bringing in the private sector and development finance institutions. “In several instances the private sector will design, build and operate key infrastructure assets,” he added.
The design of a blended-finance infrastructure fund was under way and the National Treasury has indicated that it could include blended co-funding, capital subsidies, long-term interest rate subsidies and guarantees.
The Budget Review listed the infrastructure subsectors of student housing, wastewater treatment, broadband connectivity and public transport as potentially benefitting from the fund.
The National Treasury was also reviewing existing legislation to determine how existing processes might incorporate blended-finance arrangements and has also started drafting legislation to support the fund.
Creecy said the establishment, five-years ago, of Gifa “will place Gauteng in an advantageous position to approach the fund for support once work on the regulatory environment is completed”.
Feasibility studies had already been completed for the Kopanong Precinct, which envisages a public-private partnership (PPP) to refurbish Gauteng provincial government buildings within the City of Johannesburg, as well as the Gauteng Schools Projects, which proposes the development of a PPP to design, construct and finance 110 new schools in the province.
An analysis had been conducted on how much could be provided off the yearly provincial budget to support the projects. Creecy indicated that it could, thus, seek advances from the infrastructure fund, which could be repaid through the yearly allocations.
The proposed expansion of the Gautrain passenger rail network might also benefit from the fund, but the funding model was likely to be more complex. Besides being backed by a fiscal transfer, the model could involve alternative revenue streams, such as rentals arising from associated retail developments.
She also said that Gauteng would be pursuing a co-ownership and revenue-sharing model with the State Information Technology Agency, Sentech and Broadband Infraco to integrate the Gauteng Broadband Network (GBN) with the national network.
“Our aim, through collaboration and co-ownership, is to ensure outstanding provincial government facilities are connected and citizens benefit from ease of access to available e-services,” Creecy said in her address.
In an earlier media briefing she described the GBN as a “unique” broadband footprint in that it penetrated most Gauteng townships, as well as those few rural regions within the province’s boundaries.
Gauteng is the country’s smallest, yet most populous province, with 14.7-million inhabitants.
The lion’s share of the 2019/20 budget is directed towards health (R50.7-billion), followed by education (R49.8-billion), roads and transport (R7.7-billion) and human settlements (R6.2-billion).