Jun 29, 2012
Infrastructure development will create strong economic futureBack
Port|Africa|KPMG|Projects|Resources|Road|Roads|Safety|Scott|South African National Roads Agency Limited|System|Systems|Transnet|Water|Africa|South Africa|Energy|Freight Rail Infrastructure|Logistics|Maintenance|Passenger Rail Infrastructure|Rail Infrastructure|Road Infrastructure|Road Networks|Rural Road Infrastructure|Secondary Road Networks|Systems|Telecommunications|Train Control Systems|Transport|Infrastructure|Rail|Water
"‘There needs to be a fluent process by which PPPs are formed and agreed on for the country to grow its capacity’ – De Buys Scott"
© Reuse this
“One can go so far as to say that they represent a recreation of the South African transport industry,” says audit, tax and advisory firm KPMG head of infrastructure advisory and financing De Buys Scott.
The enormous amounts being invested in the transport sector in the short term may be a burden on the economy, but the much-needed investment is paramount to the future growth and success of all sectors, including the energy and water sectors, he notes.
“Infrastructure investment must be viewed from a long-term perspective, as the long-term benefits drive the short-term burdens. The country is currently playing catch-up in terms of infrastructure investment and we are only now tackling the huge backlog of problems,” says Scott.
He adds that, over the next 5 to 15 years, current investment will significantly change the country.
The current state of road infrastructure, specifically primary road networks, is quite advanced owing to the many upgrades implemented by the Department of Trans- port, Sanral and public–private partnerships (PPPs). Secondary road networks and rural road infrastructure, however, leave much to be desired, with poor maintenance of these roads posing the biggest challenge.
The programme will focus on upgrading and expanding its current fleet; increasing the number of routes in the country; and modernising signalling systems, train control systems, telecommunications, signage and speed gates.
Once complete, the new fleet will enable the agency to transport double the number of passengers in a safer, more reliable and more efficient way.
Further, the programme will have a ripple effect on the economy, says Scott.
“Rail is said to be the primary means of transport for the lower-income earner. The new infrastructure will be efficient enough to transport more workers from the outskirts of town to the central business district to seek employment, thereby boosting the economy.”
“This capex investment is important for growing the economy, as port infrastructure relies on rail infrastructure to create one efficient network through which a country’s natural resources can be transported for export.”
The focus on improving rail infrastructure will also ease the burden placed on the country’s roads. South Africa’s road networks are heavily burdened and congested, partly owing to the number of vehicles transporting freight by road, says Scott.
He adds that, if freight rail efficiency is improved, logistics companies may find it advantageous to use rail rather than road transport, which may improve road safety.
He maintains that investment is the most significant challenge facing the many infrastructure upgrades.
Government and the private sector fund new infrastructure programmes; however, government funding is already thinly spread across the sectors, making private-sector involvement crucial to the success and sustainability of the upgrades.
Scott says each transport system needs to be assessed on its respective funding model.
Passenger rail follows a subsidised model as it is a low-cost means of transport. Govern- ment has an obligation to fund passenger rail to ensure its proper functioning but there is more private-sector involvement in freight rail. This enables the sector to follow a more self-sustainable and self-sufficient funding model, he adds.
Careful planning and budgeting by government and the private sector are also required, as specific sums of money are budgeted for each financial year.
Time and deadlines also prove challenging, which are noted in Prasa’s 20-year Rolling Stock Fleet Renewal Programme. The infra- structure programmes entail serious planning and meticulous execution, says Scott.
The country’s implementation capacity is also in question and further pressurised by the PPP formation process, he notes.
“There needs to be a fluent process by which PPPs are formed and agreed on for the country to grow its capacity.”
Scott adds that government has shown leadership and initiative in the transport sector based on its knowledge of the sector and the need for efficiency; however, for the programmes to remain sustainable, government must involve the private sector as much as possible.
The programmes are, however, viable insofar as the funding models and feasibility processes are thought through more meticulously than before, he says.
“Prasa’s upgrade programme is as an example of the rigorous and thorough feasibility process used to determine the viability of the upgrade programme. I believe that other projects of the same calibre, such as those undertaken by Transnet and Sanral, are quite similar,” enthuses Scott.
He emphasises the importance of proper analysis of the given situation before embarking on any upgrade programme.
Edited by: Chanel de Bruyn© Reuse this Comment Guidelines (150 word limit)
Other Transport & Logistics News
Updated 1 hour 32 minutes ago Public Enterprises Minister Lynne Brown has released details of the remuneration of the chairpersons and nonexecutive directors of the various State-owned company boards falling under her Ministry. The remuneration figures, which are attached, are based on figures...
Updated 1 hour 55 minutes ago JSE-listed Grindrod’s rail division on Tuesday vowed to make rail operations more cost-effective in Africa, as Grindrod Locomotives unveiled its new, cost-effective fit-for-purpose shunting and short-haul locomotive. The new GS7, launched at Rovos Rail in Pretoria,...
Updated 3 hours ago The small business development department stood by the national government's position on e-tolls, while the e-toll advisory panel continued its work, Minister Lindiwe Zulu said on Tuesday. "We've got a national government position on that [e-tolls] but there is a...
Updated 1 hour 4 minutes ago The Cape Town International Convention Centre (CTICC) has outperformed its targets over the past financial year and contributed R3.1-billion to the gross domestic product in the 2013/14 financial year. CTICC CEO Julie-May Ellingson said the convention centre had been...
Updated 1 hour 43 minutes ago Public Enterprises Minister Lynne Brown has released details of the remuneration of the chairpersons and nonexecutive directors of the various State-owned company boards falling under her Ministry. The remuneration figures, which are attached, are based on figures...
Updated 1 hour 59 minutes ago Installed wind power capacity could swell by 530% to 2,000 gigawatts (GW) by 2030, supplying up to 19% of global electricity, a report from a trade association and Greenpeace said on Tuesday. It said installed wind energy capacity totalled 318 GW at the end of last...