The government’s 2015 budget has named the country’s infrastructure as a “National Strategic Priority.” The proposed spend includes R105bn on housing and associated support infrastructure and an additional R18bn to boost grid connections and the availability of off-grid electricity.
In addition, government has implemented a number of strategies to assist the struggling electricity utility Eskom who’s current issues have been pinpointed as a contributory factor to the current state of South Africa’s economy. The government has set up a “War Room” headed by deputy president Cyril Ramaphosa to look at ways of assisting Eskom. Government has also signed guarantees to the amount of R23bn and is looking at converting subordinate loans to equity to assist Eskom.
Recently the Department of Energy has also announced expansions in the Independent Power Producer (IPP) procurement initiatives currently put forward for private entities to contribute electricity to the grid. Government is currently in the Fourth Window of awarding projects. 13 of these projects are confirmed renewable energy bids and are expected to contribute 1,121MW to the grid, an additional 1800MW are expected to be bid on during the extended period during this window.
The department is also creating a procurement programme for gas-to-power production and another for co-generation. Government has signalled their intention to build seven new nuclear power stations and is currently signing nuclear cooperation agreements with several nations.
Transnet has signed an agreement with the Development Bank of South Africa (DBSA) which allows the Development Bank to provide funding and expertise in the preparation stage of the Private Sector Participation phase to Transnet's multibillion rand infrastructure investment programme. In addition the DBSA will be eligible to compete as a funder when a project is launched and will assist Transnet in obtaining private sector funding and expertise.
The Presidential Infrastructure Co-ordinating Commission (PICC) has recently signalled their intention to invest in building or expanding six dams over the next decade to address South Africa’s long-term water and sanitation needs.
Real Gross Fixed Capital Formation growth was 8% y-o-y from 2013 to 2014, with a real growth of 21% in General government, 6% real growth in Private Sector and 2% real decrease for Public Corporations.
By Coface, an international credit insurer