Finance Minister Pravin Gordhan reaffirmed the State’s commitment to national infrastructure development in his 2014 Budget, noting that R847-billion would be invested in infrastructure over the coming three years, reinforcing a shift in the composition of government’s expenditure envelope away from consumption expenditure.

The Minister told Parliament during his delivery of the yearly budget that, while government had made “good progress” in overcoming infrastructure backlogs – having spent over R1-trillion on infrastructure in the last five years – accelerated public infrastructure investment was critical to inclusive growth.

“This budget lays the foundation for the structural reforms envisaged over the next term of this government and sets out the resource plan for an intensified implementation of our National Development Plan (NDP).

“The reprioritisation of resources [in the budget] aims to give greater impetus to programmes with the greatest developmental impact and proven implementation capacity,” Gordhan held.

Among the areas of focus he identified under the NDP were overcoming the spatial fragmentation of South Africa’s built environment, improving public transport and accelerating investment in human settlements.

Incentives contained within the Industrial Policy Action Plan would also enjoy enhanced budgetary allocation, while the implementation of expanded public works programmes would be “stepped up” as government launched the third phase of the Expanded Public Works Programme in April.

Gordhan outlined that, over the medium term, government would also focus on adding to South Africa’s electricity supply and would pursue the exploration of shale gas as a potential additional energy source.

“Yet I need to caution that success in implementing these plans depends on discipline, hard work, cooperation and sustained improvements in productivity, both in the public and the private sectors,” he commented.

PROCUREMENT REFORMS

Further, in a bid to professionalise public services and overhaul the procurement and supply chain management practices associated with government projects, Gordhan announced the introduction of several procurement reforms, which included the standardisation of infrastructure procurement processes and the creation of an inspectorate to monitor procurement plans and audit tender documents.

Moreover, spending reviews were under way to examine programme performance and value-for-money, conducted by the National Treasury, the Department of Performance Monitoring and Evaluation, and provincial treasuries.

The Office of the Accountant-General had also stepped up efforts to strengthen the financial control environment and had undertaken 27 forensic reviews over the last 12 months, leading to both criminal investigations and internal disciplinary action.

“Forthcoming regulations will strengthen the National Treasury’s oversight of public entities by requiring compliance with reporting requirements for expenditure, revenue, borrowing and performance,” Gordhan added.

ELECTRICITY INFRASTRUCTURE

Updating Parliament on government’s existing and envisaged infrastructure projects, he said the first unit of the Medupi coal-fired power station was expected to be completed towards the end of the year, while energy utility Eskom had scaled down its medium-term capital expenditure plans – though they remained “significant” – given a lower revenue forecast.

Contracts for 47 renewable-energy projects were concluded in 2012 and 2013, most of which were currently under construction, and were expected to add generation capacity of 2 459 MW between 2014 and 2016.

“A third procurement round is finalising another 1 457 MW of capacity from 17 projects with higher local content and lower costs,” Gordhan noted.

A 75 MW solar plant in Kalkbult, Northern Cape, was connected to the grid in September 2013, while, at 135 MW, Africa’s largest wind farm, in the Eastern Cape, would be fully commissioned by May 2014.

“Moreover, the country’s first baseload gas-fired power plant was recently commissioned by Sasol and a portion of the plant’s 140 MW capacity will be fed into the national grid,” commented Gordhan.

In 2013, through the Integrated National Electrification Programme, Eskom and government provided 200 000 households with electricity connections, constructed 350 km of medium-voltage lines, upgraded an additional 220 km of lines and upgraded ten substations.

TRANSPORT INFRASTRUCTURE

Meanwhile, logistics parastatal Transnet increased capacity on its coal line in 2013 by 10-million tonnes to 81-million tonnes, having taken delivery of 143 locomotives and rebuilt or refurbished 1 944 wagons since 2012.

Plans to expand the coal, iron-ore and manganese lines were at an “advanced” stage of feasibility assessment.

Seven new cranes had also been installed at the Durban container terminal, which Treasury claimed had increased efficiency by 27%.

In addition, the Passenger Rail Agency of South Africa refurbished 500 Metrorail coaches in 2013 and its new rolling stock procurement programme would get under way this year.

Gordhan added that the South African National Roads Agency had invested R137-billion from 2010/11 to 2013/14 to maintain and improve existing roads, as well as develop new road infrastructure.

“Large metros are investing heavily in integrated public transport. Cape Town and Johannesburg have built operating stations, depots and dedicated bus lanes, while Tshwane, Mbombela, Nelson Mandela Bay, eThekwini, Rustenburg and George have started construction of similar infrastructure,” he highlighted.

WATER INFRASTRUCTURE

Meanwhile, the Minister said investments in bulk water infrastructure had addressed both growing household demand and the needs of the mining, manufacturing and agriculture sectors, which remained heavily reliant on water for production.

Government spent over R8-billion on water resources and bulk water infrastructure in 2013/14, including expenditure on construction of the new Nwamitwa dam, raising the walls of the Tzaneen and Clanwilliam dams, developing the Mokolo and Crocodile river water augmentation project, and developing and upgrading water treatment facilities and bulk water infrastructure at various sites.

In addition, a programme to rehabilitate 35 dams had been completed and work was progressing on the country’s five largest water transfer schemes.

“Over the next three years, many of the country’s large infrastructure projects will start to operate. New power stations will begin providing electricity for our factories, schools and households, while new and upgraded rail infrastructure, roads and urban transport systems will get more goods to market,” Gordhan pointed out.

Spending on social infrastructure – which included health, education and community facilities – would increase from R30-billion in 2012/13 to R43-billion in 2016/17, with priority given to programmes centred on eradicating school infrastructure backlogs and refurbishing clinics and hospitals.

PRIVATE SECTOR INPUT

Gordhan added that the private sector was also making an increasing contribution to infrastructure investment, once again highlighting the conclusion of contracts for 47 renewable-energy projects in 2012 and 2013, which represented investments of about R70-billion.

A medium-term integrated city development grant of R814-million had also been introduced to strengthen long-term city planning and encourage private investment in urban development.

“The next phase [of South Africa’s economic growth] is about the dynamism and agility of the private sector as well as the synergies created [between it and] government,” Gordhan noted.