Introduction
Following the State of the Nation Address (SONA) by President Cyril Ramaphosa earlier this month, today I am pleased to be updating the media on progress with projects in the Infrastructure Investment Plan along with the head of Infrastructure South Africa (ISA), Dr Kgosientsho Ramokgopa.
We will provide an update on some of the 62 projects in the Infrastructure Investment Plan which was approved by Cabinet in May 2020 and contains projects form all three spheres of government, state-owned entities and the private sector.
I will also be speaking to some of the key issues within the mandate of the Department of Public Works and Infrastructure (DPWI) as highlighted by the President in the 2022 SONA.
Background
The Infrastructure Investment Plan forms a central part of the Economic Reconstruction and Recovery Plan (ERRP) aimed at stimulating economic growth and job creation as announced by President Ramaphosa in October 2020.
The projects within the Infrastructure Investment Plan were gazetted as Strategic Integrated Projects (SIPs) in line with the Infrastructure Development Act in July 2020 enabling them to follow an expedited path to ensure implementation.
The projects have been gazetted as SIPs to contribute to economic growth by reviving the construction sector and creating much needed jobs for people.
The Infrastructure Investment Plan was highlighted as the “flywheel to economic growth” by the President and contains 62 projects across the country in various sectors which are at various stages.
It must be noted that most of the government projects in the Infrastructure Investment Plan are implemented by the respective government departments, spheres of government and SOEs with DPWI and ISA playing a co-ordinating role of oversight and to assist with raising funding from outside of the fiscus and assist with any blockages on projects.
Through the SIPs, government is leading by investing in infrastructure and creating the conditions conducive to create the crowding in effect by the private sector to create jobs.
Infrastructure Fund
In August 2019, following a Cabinet approval, the Infrastructure Fund was announced as a ring-fenced division of the Development Bank of Southern Africa (DBSA).
The Infrastructure Fund was operationalised in 2020 with a commitment of R100billion from government over a ten year period and has been capacitated with the requisite skills and capacity to enable it to achieve its blended financing mandate.
Over the next three years, R24 billion has been allocated to the Infrastructure Fund for blended financed projects.
The Infrastructure Investment Committee has met several times with myself as the chairperson of this committee.
Projects are approved by the Infrastructure Fund for blended finance with contributions from the fund and the remainder to come from the private sector.
The below Infrastructure Fund pipeline projects were submitted for Budget Facility for Infrastructure (BFI) for consideration.
- For the 2021 Adjustment Budget: Four student housing infrastructure projects delivering 9 500 beds at a cost of over R3 billion was considered. The BFI approved amount was R900million from the Infrastructure Fund over two financial years.
- For the 2022 Budget, the following projects were considered by the relevant BFI committees:
- Social Housing Programme (SHP): Total project cost = R1.1 billion. BFI Approved amount R304.5million over the next two financial years from the Infrastructure Fund.
- Lepelle Northern Water (LNW): Total project cost = R4.5 billion. BFI Approved amount R1.4billion over the next three financial years from the Infrastructure Fund.
Progress on SIPS
A number of the projects have been launched and are progressing well especially in the human settlements and transport sectors and we highlighted a number of these with site visits last year.
We are not just making announcements, we will only launch projects after all processes have been completed such as the financing.
In the coming weeks we will be visiting more projects which have started, starting with the N2 Nodal mixed residential development in Nelson Mandela Bay Municipality, the Sondela Phase 2 and the Jeppestown Human settlements projects in Gauteng. I encourage the media to join these visits to see the progress first hand.
Last year we visited the following projects which were progressing well:
- SIP 24c: The Lufhereng Mixed Use development in Soweto,
- SIP 21 f & g: The N3 Road Upgrades in KwaZulu Natal,
- SIP 21 b: The Musina Ring Road in Limpopo
- SIP 21 m: The Small Harbours Repairs and Maintenance Programme at the 13 proclaimed fishing harbours in the Western Cape such as Hermanus and Saldanha Harbour.
Transport Sector Projects:
The Department of Transport’s projects with SANRAL as its implementing Agent, is progress well in terms of the delivery of National Roads in South Africa. Of the SIP 21 Gazetted projects, the following projects are completed:
- SIP 21 a: N1 Windburg Interchange Windburg Station: Free State
- SIP 21 c: N1 Polokwane Eastern Ring Rd Phase 2: Limpopo
- SIP 21 d: N1 Ventersburg to Kroonstad: Free State
- SIP 21 e: N2 Mtunzini Toll Plaza to Empangeni T-Junction: KwaZulu Natal
Projects in Construction:
- SIP 21 b: N1 Musina Ring Road: Limpopo (This project is expected to be launched in the first quarter of 2022)
- SIP 21 f: N3 Cato Ridge to Dardanelles: KwaZulu Natal
- SIP 21 g: N3 Dardenelles to Lynnfield Park: KwaZulu Natal
- SIP 21 j: N3 Ashburton Interchange to Murray Road: KwaZulu Natal
Projects in Procurement stages include:
- SIP 21 h: N3 Paradise Valley to Mariannhill Toll Plaza: KwaZulu Natal
- SIP 21 i: N2 Edwin Swales to South of EB Cloete Interchange: KwaZulu Natal
- SIP 21 k: N3 Mariannhill Toll Plaza to Key Ridge: KwaZulu Natal
- SIP 21 l: N2 EB Cloete Interchange: KwaZulu Natal
Small Harbours Repair and Maintenance Programme: SIP 21 m
Phase 1 entails the redevelopment of the 13 proclaimed fishing harbours in the Western Cape currently being implemented by DPWI which includes the refurbishment and upgrades of the harbours to an 80% operational efficiency. The repair programme is just over 97% completed and is expected to be fully completed by March 2022.
This programme is being implemented at the following harbours:
- Kalk Bay
- Gordons Bay
- Hermanus
- Gansbaai
- Struisbaai
- Arniston
- Lamberts Bay
- Laaiplek
- St Helena Bay
- Saldanha Bay
- Pepper Bay
- Hout Bay
- Stilbaai
To date, this project has created 894 job opportunities and empowered local SMMEs to the value of R114 million.
In April 2021, Dr Ramokgopa and I conducted a site visit to the Saldanha Bay harbour Project and in December 2021, we opened the refurbished multi-purpose centre at the Hermanus Harbour which is being utilised by local traders as part of efforts to stimulate local economic growth and create jobs for the surrounding coastal communities.
Phase two of the Small Harbours SIP includes the new small harbours identified in the Eastern Cape, Northern Cape and the KwaZulu-Natal which is currently in the project preparation stage.
Human Settlements Sector Projects
The Human Settlement Sector is progressing at an accelerated pace with Social Housing receiving much of the attention in the past year.
The Social Housing Regulatory Authority has worked closely with the Infrastructure Fund where they were able to unlock R305 million approved funding over two years for the Priority Social Housing Projects.
I will now go into some highlights of human settlements projects rolled out in the past financial year.
- SIP 24 i: Fochville Extension 11 in the West Rand District Municipality, Gauteng. The proposed development will consist of 2,198 residential units, out of which 258 will be Social Housing Units (SHU). This project is expected to create 953 jobs.
- SIP 24 k: Hospital Street in Mujuba District Municipality, KwaZulu-Natal. The proposed development consists of 53 four-storey building blocks consisting of 1,056 units. This project is expected to create 3384 jobs. Construction activities are currently underway on site, the boundary wall, guard houses, office and refuse building have been completed. 54 platforms have been filled, stormwater, water and sewer reticulation has also been completed.
- SIP 24 j: Germiston Extension 4 in Ekurhuleni Metropolitan Municipality, Gauteng. The project has planned 201 SHUs to accommodate 601 people. This project is expected to create 847 jobs.
- SIP 24 m: Kwandokuhle Social Housing Project in Gert Sibande District Municipality, Mpumalanga. The project involves construction of a total of 492 SHUs in Govan Mbeki Local Municipality in the Gert Sibande District Municipality, Mpumalanga province. This project is expected to create 1544 jobs.
- SIP 24 l: Hull Street Phase 1 in Francis Baard District Municipality, Northern Cape. The Hull Street Social Housing Project envisions delivering a total of 600 SHUs in two phases. This project is expected to create 1152 jobs.
- SIP 24 p: The Willow Creek Project is located in Ermelo, in the Msukaligwa Local Municipality in the Gert Sibande District Municipality, Mpumalanga province. The project entails the construction of 360 SHUs in the Ermelo Central Business District (CBD). This project is expected to create 1062 jobs
- SIP 24 o: Sondela Village Phase 2 in Gauteng is now 100% completed, all 177 units have achieved Practical completion. Tenants have moved into 96 units, this equates to 54% of occupancy.
- SIP 24 r: The Jeppestown Project in Johannesburg is also progressing well at 37% completion rate with 95 units targeted with an estimated 500 job opportunities being created.
- At Greencreek SIP 24 g, one of the private sector projects gazetted, 3 872 units are targeted with 412 units already constructed and 361 units already occupied. The project is intended to create over 3 000 job opportunities.
- The Mooikloof Development SIP 24 h is also progressing well.
In total 18 housing projects have been gazetted as SIPS to the value of R129 billion which together will produce more than 190,000 housing units and is estimated to create over 263 000 jobs.
Water & Sanitation Sector
Under the Strategic Integrated Project 19: Water & Sanitation, the sector has a total investment value required of approximately R115bn. The projects are expected to create more than 20 000 jobs during construction and over 14 000 jobs during the operational phases. The projects that are ready for investment include:
- SIP 19 a: Lesotho Highlands Water Project (Phase 2 (Gauteng/Lesotho): Advance works are under construction. Tender design for the main contracts is complete; award of the main contracts is now dependent on finalising the loan agreements. The project is intended to create around 3 500 jobs during construction.
- SIP 19 b: Phase 2A of the Mokolo Crocodile River (West) Augmentation Project (Limpopo): Raising of long term debt for the project is underway. The Infrastructure Fund is exploring the possibility to partner with the Trans-Caledon Tunnel Authority (TCTA) to raise R5 billion Standby Credit Facility to credit enhance the debt raising prospects of the transaction. The project is in Procurement and is intended to create approximately 2 000 jobs during the construction period.
- SIP 19 i: Berg River Voelvlei Augmentation Scheme (BRVAS) (Western Cape): The final draft BRVAS Agreement was circulated to the Users for consideration by the Municipal Councils and Irrigation Boards. Finalisation of the agreement will pave the way for long-term funding. The project is in Procurement with the potential to create approximately 400 jobs during construction phase.
- Other Water and Sanitation SIPS such as the uMkhomazi Water Project, SIP 19 c is in procurement preparation stage and the Mzimvubu Water Project, SIP 19 f is in the stage one construction phase.
Energy Sector Projects: SIP 20
- The Risk Mitigation Independent Power Producer Procurement Programme (SIP 20a), with an approximate investment value of R50 billion Financial close has been extended to end of March 2021.
- Local Content was a key qualification criterion with a requirement to demonstrate at least 40% threshold to pass the qualification criteria for the selected preferred bidders. The project is intended to create over 15 000 job opportunities during the operations phase alone.
- On the Embedded Generation Investment Programme of 400MW (SIP20c), the Development Bank of South Africa (DBSA) has issued a Request for Proposals (RFP) for the programme on the 31st July 2021, with application submissions received by the 30th of September 2021.
- It is expected that the project can ensure 700 000 tons of emissions per annum reduction in RSA once projects are completed. This forms part of Green House Gas emissions reduction plans.
- Bid window 5 with an estimated capacity of 2583MW was also recently announced by the Minister of the Department of Mineral Resources and Energy. Financial close is at end of April 2022.
Special Projects
The Welisizwe Rural Bridges Programme, SIP 25
This is one of the 12 special projects also gazetted as SIPS and this programme involved the implementation of bridges in the rural areas to assist communities to access social amenities and economic opportunities, especially during inclement weather.
As we know many rural communities are severely impacted by flooding and lack of access where we see many community members especially young children having to cross dangerous river streams to get to school or clinics and places of work.
The Welisizwe Rural Bridges Programme is implemented between the DPWI, the Department of Defence and provincial Transport and Public Works Departments.
A number of bridges have been installed in the Eastern Cape and KwaZulu Natal in the past two years. Four bridges have been completed in the Eastern Cape and 12 in KZN.
The Department of Defence has a capacity to deliver 95 bridges per year, hence the announ