State to spend R827bn on infrastructure

Wednesday, February 27, 2013

Cape Town – Financing of R827 billion on infrastructure projects over the next three years, to be drawn from the fiscus and state-owned enterprises, is in place, the Minister of Finance Pravin Gordhan said today.

Presenting the Budget Speech in the National Assembly, Gordhan said financing for infrastructure projects is not affected by the spending cuts in the budget.

The government spent R642 billion on infrastructure over the last three years.

While R430 billion will come from the fiscus, R400 billion will be drawn from Eskom, Transnet and other state-owned enterprises, he said.

The R430 billion from the fiscus has been allocated to build schools, hospitals, clinics, dams, lay out water and sanitation projects, expand electricity networks and supply electricity to over a million new homes, build more courtrooms and prisons and construct better bus, commuter rail and road links.

Most of the spending falls under provinces and municipalities.

Funding from state-owned enterprises will be drawn from their respective balance sheets and from additional borrowing over the next three years, backed by guarantees from the National Treasury.

The R400 billion from state-owned enterprises will fund the ongoing building of power stations and the rolling out of new electricity transmission lines, as well as for new rail, ports, pipelines, water-transfer schemes and fund various airport upgrades.

Gordhan said though there are agencies and departments that have struggled to spend their full infrastructure budgets, particularly as funding levels have increased, progress is being made.

“Records show that government’s ability to spend has been steadily rising from year to year, but it is not yet fast enough,” he said.

The Budget Review points out that R3.6 trillion in major infrastructure projects are in progress or under consideration.

Ongoing programmes or construction on new projects accounts for almost a quarter of the total expenditure – with most of this being spent on new power generation projects (R537 billion), transport (R151 billion), new schools (R52 billion), hospitals and clinics (R37 billion) and on building dams and pipelines (R35 billion).

Several private-sector projects are also contained in the government’s Strategic Infrastructure Projects, bringing the total value of projects to over R4 trillion.

Public and private-sector capital spending increased in real terms by 4.3 percent and 4.6 percent respectively in 2011 and by 11.1 percent and 4.3 percent in the first three quarters of 2012.

However as a percentage of GDP, capital spending has not yet recovered to the level reached in 2008, before the Global Financial Crisis. –