Photo by: Bloomberg
KwaZulu-Natal municipalities on Wednesday pitched 26 projects worth R6.8-billion to prospective private sector funders at the KwaZulu-Natal Infrastructure Fair, in Durban.
Although the number of projects pitched had increased from the 20 pitched at a similar event in Pietermaritzburg in October 2014, the value of the projects had decreased significantly from R22-billion to R6.8-billion.
KwaZulu-Natal Treasury infrastructure funding specialist Tim Madgwick told delegates this week that the total depended on the sizes of individual projects. Many of those projects were still awaiting funding but there was progress and the Treasury and project planners needed to keep “chipping away”.
He admitted that securing private sector funding was the only feasible way of delivering on the massive backlog of infrastructure in the province.
Projects pitched at this years fair included the Sani Pass upgrade, pedestrian and vehicle bridges in rural KwaZulu-Natal, a number of bulk water projects, the upgrade of the Howick central business district, the construction of a fire station in Kokstad and the creation of a smart rural village in the Zululand town of Jozini.
Madgwick said stakeholders in the KZN Funding fair were also looking to form a Corporate Social Investment trust in conjunction with Consulting Engineers South Africa (Cesa). This would plug a funding hole for projects that had largely social benefits rather than tangible financial paybacks – a concern raised during presentations by the Development Bank of Southern Africa and other commercial banks.
He stated that it was no secret that national government coffers were bare and that grant funding for projects was scarce. The provincial Treasury had obtained grant funding for R120-million for just one project – the establishment of technology hubs in Pietermaritzburg, Port Shepstone, Richards Bay and Newcastle – from the European Union.
The KwaZulu-Natal provincial government needed R1.3-trillion to sort out infrastructure backlogs in the province, Madgwick pointed out.
As a result of unbudgeted wage increases following the public sector wage agreement, a further R1.6-billion would be reallocated from departments’ infrastructure budgets this year, again compromising delivery of much-needed infrastructure, he added.
Madgwick cautioned that alternative funding was highly regulated by government through legislation, often presenting a problem for various stakeholders considering public–private partnerships (PPPs) for key projects.
However, he remained confident that a way could be found. “There are possibilities out there so we can’t give up. It depends on both the public and the private sector to make sure that we can deliver.”
The Funding Fair, he added, would provide the platform for not only bringing government and the private sector together but creating unity.
“There is risk on both sides but, through this platform, we can facilitate relationships,” he said.
According to Madgwick, two still undisclosed projects to be funded through PPPs were close to finalisation and could be rolled out shortly. These would act as pilot projects.
Although there was a danger that PPPs may only be realised over periods of as long as five years, he said the Treasury was looking at international models and, in particular, at a UK model that stipulated that projects needed to be delivered within 18 months.
Meanwhile, he added that the Treasury was creating a database of projects that it could link to potential funders.
However, he requested that projects that were ready to be built rather than those still in the feasibility stages, be submitted for consideration.