Johannesburg - South Africa's construction sector is set to be significantly impacted if a draft transformation policy published by the SA National Roads Agency (Sanral) is implemented.
Skhumbuzo Macozoma, the chief executive of Sanral, said on Friday at the launch of the draft policy and the agency’s draft Horizon 2030 strategy that Sanral was committed to go beyond the minimum requirements for transformation set by existing legislative and regulatory frameworks.
Macozoma said the biggest intervention with its Horizon 2030 policy was to “push back” on matters of funding policy, which includes e-tolls. He stressed Sanral’s mandate was not policy and it did not want to be dragged into debates on how roads should be funded.
“We want to be able to put up the plans, and submit them through the department of transport and national treasury and must be given the funds so we can run with it.
“This whole issue of us delving into funding policy has left us in serious trouble, which is why we have this big issue about toll policy. I believe the department will help us to draft a new toll policy to help us on the future of tolls,” he said. In terms of the draft transformation policy, on capital projects Sanral would only do business with companies that were at least 51percent black-owned and with a minimum broad based black economic empowerment Level 2 rating while a maximum of 15 tenders a year would be issued to a single company and contractors would be required to make use of Sanral-approved sub-contractors.
Sanral said the same provisions would apply for road maintenance projects to ensure the broad-based participation of local companies and communities and special attention given to the procurement of road safety material from black suppliers. The equity ownership level specified in Sanral’s draft policy is not aligned with the agreement reached between the government and seven listed construction companies in terms of the voluntary rebuilding programme (VRP) agreement.
The VRP agreement included a collective payment by the seven companies of R1.5billion over 12 years to a socio-economic development trust and to undertake further transformation initiatives, including either becoming “fully transformed” with at least 40percent of equity in the hands of black South Africans or commit to significant mentoring initiatives for up to three emerging black-owned enterprises.
Draft policy
Sanral’s draft transformation policy also stated that concessions to manage and operate toll roads would only be awarded to companies with a 51% black ownership and, to reduce monopolies, Sanral would limit the number of contracts awarded to established and dominant industry players.
Black real estate and property developers would “be allocated all Sanral-related business on contracts below R100million” and the 51percent requirement would apply for larger developments.
Sanral transformation policy would apply to all sub-contractors in the fields of information communication and technology, professional services, finance and audit and marketing and communication while contracts would also include detailed provisions for sub-contracting to small and micro enterprises.
Macozoma said Sanral played a critical role in the construction and related industries and was keenly aware of the impact its procurement practices had on economic transformation, job creation and the lives of millions of people across South Africa.
“We accept the responsibility to use our procurement and supply chain processes to transform the construction industry and Sanral is confident that this will be a catalyst for a much broader-based participation of black-owned companies in the sectors,” he said. Macozoma added that there would also be an equitable allocation of projects across Construction Industry Development Board grades to accommodate emerging and smaller companies.
“This policy is going to trigger a review of our supply chain management policy, which in turn is going to change our procurement strategy. It must. If you don’t change your procurement strategy, you will not be able to realise the objectives of the transformation strategy. It is going to change other policies, such as human resources,” he said.
Macozoma added in terms of the Horizon 2030 strategy, Sanral was bringing back the focus on long-term planning. He said the road network managed by Sanral had grown from 6700km to 22000km and there was an expectation that it would continue to take over roads from struggling local authorities because it had been doing this over the years.
“But we caution that going forward it is going to become very unsustainable for us to do that, particularly in view of the economic situation in the country. “We have to apply caution, we have to engineer principles in making those decision and need to make sure we have to have the best interests of this entity at heart, otherwise this is going to spiral down into another inefficient roads authority that is not able deliver on its mandate,” he said.
Macozoma is also in favour of amending the Sanral Act, adding he had never understood why Sanral’s jurisdiction was limited to South Africa’s borders. “This entity has amassed a lot of knowledge and experience over the years and a lot of African countries come to South Africa for advice and assistance, but we cannot go into Africa.
“We feel there is a big prospect for Sanral to play a cardinal role in improving infrastructure in Africa,” he said.