Reforms to attract infrastructure investment

30 October 2024 by Guest

Minister of Finance Enoch Godongwana has announced reforms that will create conditions to attract greater infrastructure investment by private sector participation.

“Collectively, the infrastructure reforms will strengthen planning, appraisal, contracting, financing, and monitoring and evaluation. The outcome will be faster delivery of infrastructure that supports economic growth, the expansion of access to basic services and boosting job creation,” Godongwana said on Wednesday.

Tabling the 2024 Medium Term Budget Policy Statement (MTBPS) in Parliament, the Minister said one of the strategies aimed at lifting the economy to higher and towards a more inclusive growth path is supporting growth enhancing infrastructure.

“Pillar three is about effective infrastructure investment, to boost economic activity and enable higher growth over the medium term. In this regard, we are implementing reforms that will create conditions to attract greater private sector participation,” Godongwana said.

The reforms include:
• Mobilising significant private sector financing and technical expertise to augment the limited public sector capacity and capability.
• We are amending the PPP regulations to simplify requirements for undertaking these projects.
• The amended Treasury Regulation 16 will be published before the end of November for implementation in 2025/26. The Municipal PPP Regulations 309 will be finalised by June next year.

“We are establishing dedicated capacity to plan, prepare and design programmes that will generate a credible pipeline of projects that can be taken to the market.

“The Department of Water and Sanitation’s Water Partnerships Office has two priority programmes for non-revenue water and recycling wastewater that require private investments.

“Similarly, the Department of Transport, Transnet and the Passenger Rail Agency of South Africa are finalising a list of priority projects that will be issued to the market in 2025/26,” the Minister said.

The resolution of the Gauteng Freeway Improvement Project has unlocked a project pipeline to the value of R85 billion for the non-toll network over the next three years.

The Minister said government is improving the capital budgeting process.

The Budget Facility for Infrastructure is being reconfigured into a centralized gateway for all large infrastructure projects that require fiscal support to advance.

From 2025, the facility will have a continuous evaluation process instead of one window per annum. The National Treasury will, in January 2025, publish a circular to guide the submission of proposals.

“Lastly, government is making a concerted effort to increase the pool of funders to diversify public infrastructure financing through new mechanisms and instruments,” the Minister said.

These include build-operate-transfer (BOT) structures and other concessions.

“We are developing a blended finance risk-sharing platform that includes a credit guarantee vehicle that will help de-risk public-sector projects while reducing government’s contingent liabilities. Fiscal support is proposed for the projects evaluated in the 2024 BFI window,” the Minister said.

This includes, but is not limited to: two hospital projects, including a district hospital in Limpopo; landside capacity expansions at the Cape Town Container Terminal; capacity upgrades on the rail network from Watloo to Gqeberha; rehabilitation of water infrastructure in eThekwini; and Student housing accommodation at six higher education institutions.

“A request for proposals will be issued this year for funders who are interested in supporting these projects, as well as projects for urban rail revitalisation, disaster relief and metropolitan trading services. Funding for these will be separated from broader sovereign borrowing and be accounted for separately,” the Minister said. – SAnews.gov.za

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Wed, 10/30/2024 – 14:49

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