Capex spend decreases in 2017

Monday, August 20, 2018

While capital expenditure by public sector institutions decreased in 2017, significant amounts were spent on service delivery orientated aspects, Statistics South Africa (Stats SA) said on Monday.

The findings of the 2017 Capital Expenditure by the Public Sector report showed that total capital expenditure by public sector institutions decreased by R12 068 million from R283 276 million in 2016 to R271 208 million in 2017.

Capex (capital expenditure) by public sector institutions has for the last five years exceeded R1.3 trillion with 2017 being the first year-on-year capex decrease, since 2009.

The report found that new construction was the largest component of public-sector capex with public corporations being the largest spenders.

Power utility Eskom remained the main contributor to the total capital expenditure (R75.7 billion) during the 2016/17 financial year, which was spent mainly on power generation projects at Kusile power plant and nationwide on new electricity distribution programmes.

Meanwhile, the South African National Roads Agency’s capital expenditure increased to R9.3 billion in 2017 from R8.5 billion in 2016. Its capital works on roads (such as the Moloto road) amounted to R6.3 billion.

Transnet spent R1.9 billion on purchases of new wagons for freight rail and R22.5 billion on various equipment for various operating divisions across the country, while Telkom invested R8.2 billion mainly in submarine cable systems, network evolution initiatives and freehold buildings, among others.

The report showed that capital expenditure increased on other fixed assets (R2 337 million), land and existing buildings (R1 062 million) and leased assets and investment property (R171 million).

Capital expenditure decreased on plant, machinery and equipment (-R8 893 million), new construction works (-R5 357 million) and transport equipment (-R1 388 million).

Higher education institutions spent R6.9 billion on fixed assets in 2017, with the University of Venda having spent R615 million on work in progress of student residential buildings and the construction of office blocks.

The country’s 257 municipalities were responsible for 23% of total public sector capital expenditure. Johannesburg accounted for 3%, while Cape Town and eThekwini accounted for 2% respectively.

Capital expenditure is any expenditure incurred in or incidental to the acquisition or improvement of land, buildings, engineering structures and machinery and equipment.

The expenditure normally confers a lasting benefit and results in the acquisition of, or extends the life period of a fixed asset.

Capital expenditure does not measure or monitor specific projects of specific entities. It only reports on capex spend (by type) during the financial year.