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Government plans to make changes in infrastructure development legislation to boost investments

Strong indication that the government will soon make changes to legislation. Picture: Edgar Su.

Strong indication that the government will soon make changes to legislation. Picture: Edgar Su.

Published Oct 8, 2021


PRESIDENT Cyril Ramaphosa has given a strong indication that the government will soon make changes to streamline the legislation governing infrastructure development in a bid to boost private sector participation.

Ramaphosa yesterday said the government’s advisory body, Infrastructure South Africa (ISA), will propose amendments to the Infrastructure Development Act in the coming year.

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He said these amendments would include new regulations and changes to other legislation, including the existing public-private partnership regulations.

“We recognise the current policy and legal framework for public infrastructure is fragmented, with many overlapping institutional roles and poor accountability,” Ramaphosa said.

“The regulatory framework intends to clarify roles and responsibilities among all relevant organs of state in the preparation, approval, procurement and delivery of large infrastructure projects and programmes, whether they are designed as public-private partnerships or for direct fiscal expenditure.”

Currently, there is much duplication within the state organs facilitating infrastructure development, including within the Department of Public Works and the Presidency.

Infrastructure investment is central to the economic recovery plan announced in October 2020 to support the economy in the short term, with public-sector infrastructure spending over the medium-term expenditure period estimated at R791.2bn.

Ramaphosa also said underspending on public infrastructure budgets had left the ratio of gross fixed capital formation to gross domestic product (GDP) at a dwindling 14 percent, instead of at least 30 percent recommended by the National Development Plan.

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“The focus is on capital investment in the large network sectors of energy, water, transport and digital,” Ramaphosa said.

“At least a third of the capital required for this infrastructure should come from the private sector.”

Industrial Development Corporation (IDC) head of infrastructure, Nina Yose, said the IDC was available to invest in infrastructure projects that contribute to industrial development.

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“We do project development, but we do it even earlier with regards to doing the bankable feasibility study (BFS) with the sponsors, in this instance it’s mostly the private sector.

“The risks are high, but the investment is generally on the low-end. For example, we are putting in R44 million for the BFS in the Sasol green hydrogen project.

“IDC basically wants to partner with various private sector players to get project development off the ground, and this will then de-risk the project on the market side.”

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Yesterday, Sasol announced a feasibility study to explore the potential of Boegoebaai, in the Northern Cape, as an export hub for green hydrogen and ammonia that could create up to 6 000 direct jobs.

As a result of continuous underspend

in infrastructure investment, ISA has drafted a National Infrastructure Plan 2050 that sets the vision for what needs to be achieved in public infrastructure and the policy stances required to get there. Sugen Pillay, president of the Consulting Engineers South Africa, said they were fully behind the National Infrastructure Plan 2050.

Pillay said the key challenges with infrastructure development was the lack of capacity in the state, and supply-chain management processes.

“We have ideas based on short-term, medium-, and long-term interventions so that we slowly start developing capacity where it matters,” Pillay said.

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