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 Roads News
Article contains comments
Updated 6 hours ago Protech Khuthele Holdings on Wednesday said, in a cautionary note to shareholders, that, as the failed company unwound, investigations were ongoing into its affairs. The company provided no indication of the completion date.
Updated 6 hours ago Private equity investors are increasingly becoming more active in Africa’s bid to narrow the $90-billion a year infrastructure funding gap constraining the continent’s growth. This was according to a survey by the Southern African Venture Capital and Private Equity...
Updated 7 hours ago The shortlist of innovations in the Africa Prize for Engineering Innovation was announced on Wednesday, comprising 12 new innovations from seven African countries. The shortlist announced by the UK’s Royal Academy of Engineering (RAEng) included innovations in...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
The latest TransUnion Vehicle Pricing Index (VPI) contains a number of small, but significant indications that the tide may at last be turning for the beleaguered used car industry. For the third successive quarter, used car inflation has increased on a year-on-year...
The South African new vehicle market is likely to reach around 630 000 units in 2014, down from the 650 000 units recorded in 2013, says Toyota South Africa Motors (TSAM) president and CEO Dr Johan van Zyl. Van Zyl is also president of the National Association of...
Efforts by the Kenya government to increase energy generation by 5 000 MW over the next three years received a major boost following the award of a $2-billion contract to build a coal power plant in Lamu. Despite allegations of irregular tendering process, the...
Using crafty wordplay on a well-known Internet meme, brilliant South African-born US entrepreneur and businessperson Elon Musk announced that Tesla Motors would not initiate patent lawsuits against anyone who, in good faith, wanted to use its technology. Instead,...
August new vehicle sales declined by 1.4%, to 55 722 units, compared with the same month last year. Assisted by the car rental market, the South African new passenger car market, at 37 953 units, contracted by 1 047 units, or 2.7%, compared with August last year.