List shows state infrastructure expansion plans starting to materialise

THE GOVERNMENT’S longdelayed infrastructure plans may finally be getting off the ground. According to Nedbank’s recently released capital expenditure project listing, the private sector remains the main driver of investment but its contribution is shrinking.

In contrast, plans from general government “increased noticeably” between January and June, following two years of slowdown, Nedbank senior economist Nicky Weimar said.

She said the progress reflected “the strategic integrated infrastructure plan” launched by President Jacob Zuma in his State of the Nation address in February. But she noted that it would take time for the announced projects to take off and for the impact to be seen in the economy.

Meanwhile, slow economic growth and a lack of capacity are setting the scene for social and industrial unrest.

Weimar said Nedbank was not able to monitor the progress on social infrastructure. For capacity expansion plans, the listing includes only projects that are worth R20 million or more. So she was unable to comment on the progress on this score.

The listing showed 46 new projects, worth R24 billion, were announced by the government – out of the total of 59 valued at R55.3bn.

The private sector accounted for only 58 percent of the total value and 57 percent of the number of projects, down from 82 percent and 74 percent, respectively, in the last calendar year.

The new impetus from the state was confirmed by the Reserve Bank Quarterly Bulletin released on Tuesday, which recorded a 15 percent second-quarter increase in the government’s real gross fixed capital formation. The figure represents a quarterly change, adjusted for inflation and seasonal factors and multiplied by four to show an annual change.

“The value of projects by public corporations has also increased after four years of weak performance,” she said.

A sectoral breakdown shows that most of the activity was in electricity, gas and water projects, with 23 new projects worth R25.4bn. Renewable energy and water distribution infrastructure featured prominently.

In the sector that includes transport, storage and communication, six new projects worth R12.7bn included plans by Transnet and Swaziland’s government to build a 146km railway line between Mpumalanga and Swaziland.

It will have the capacity to export 15 million tons of coal a year through Swaziland. This is part of an initiative to shift the transport of commodities from the roads to rail over the next seven years, by expanding rail and port infrastructure.

The mining and manufacturing sectors were cautious, as demand for exports weakened and growth in domestic consumption faltered.

The value of mining projects fell sharply to R6.3bn from R34.2bn in the first half of 2011.

In manufacturing, announced projects were slightly up from R5.9bn in the previous first half to R6.7bn.

The biggest was the government’s R2bn ethanol facility, followed by Sasol’s R1.8bn 140 megawatt gas engine and power plant in Sasolburg.

The finance, real estate and business services sector was weak with seven new projects worth R1.7bn, down from R3bn.