Treasury, business task team to ease build plan roll-out
THE Treasury has set up a task team with the financial services industry to find new ways to improve the funding and efficiencies of government’s R827bn infrastructure roll-out.
Many government projects have been hamstrung by bottlenecks and delays, with Eskom’s repeated moving of the Medupi power station due-date resulting in a near-tripling of costs.
The task team wants to harness the private sector’s efficiency and financial capital-raising know-how to help cut costs and reduce bottlenecks by planning early, with more financial experts around the table and more retirement sector funding utilised.
“We want to create a framework that lays out new options for how everyone in the financial sector can participate,” director of capital projects at Treasury Nicky Prins said yesterday. “We need to firstly understand the requirements of the different tasks in the industry and for them to understand government’s policies, interests and concerns.”
The task team with the industry was in place, and the Association for Savings and Investment was a catalyst to get it going. The Treasury told an investment conference in Durban it would represent other parts of government and had been discussing the issue with various departments to come up with solutions.
“We have been developing quite a lot of goodwill and trust,” Ms Prins said.
The value of major infrastructure projects in progress or under consideration in the public sector is more than
R4-trillion and significant private investment was needed.
About 40% of these projects are in implementation, but for the remainder of them concept proposals have to be assessed for alignment with the priorities set out in the National Development Plan, followed by rigorous feasibility evaluations. Ms Prins said the government did not just want to share the burden of cost and capital, but was also looking at harnessing the efficiencies of the financial sector in raising capital and providing funding.
Ms Prins said cost over-runs were rooted in the planning stages. Only 2% of project costs were spent on feasibility studies, “but if you get it wrong it affects the 98%”.
Banking Association of SA MD Cas Coovadia said collaboration with the private sector was needed from the start, and more “crowding in” of the private sector was needed. “SA’s banks can get involved in all links of this value chain, but how we package this has an impact on the costs for end users as well.”
Isaac Ramputa, assistant general secretary of finance union Sasbo, said labour had always advocated investment in infrastructure that uplifted communities. He was concerned there was too much talking and too little implementation.