The South African National Roads Agency (Sanral), which has issued almost no new tenders this year, was hoping to issue several new major multibillion-rand tenders soon.
However, Sanral chief executive Skhumbuzo Macozoma, said yesterday that “the unfortunate impasse” with the National Treasury last year would affect the construction sector through an 18-month lag in construction projects.
Despite this impasse, Macozoma told the annual conference of the SA Forum of Civil Engineering Contractors (Safcec) that Sanral had awarded the two mega bridge projects on the N2 Wild Coast at a cost of more than R3 billion, while the seven packages of new road construction currently under design would soon be tendered and involved a projected further budget of about R6bn.
Macozoma said Sanral was also pushing “very hard” to secure funding for the development of the N3 section from Maritzburg to Durban at an estimated cost of about R20bn.
“It is our hope that with the help of government and industry players, we can unlock the rest of the R128bn worth of national roads projects that were earmarked for roll-out through private finance, which currently cannot move due to the anti-toll sentiment in the country,” he said.
Macozoma added the current Sanral 2018/19 medium-term expenditure framework (MTEF) non-toll budget allocation amounted to about R54bn, plus another about R15bn for the toll portfolio.
“This will go to the traditional maintenance and capital works that have been prioritised in this cycle under very difficult budget conditions.
“With such budget commitments to projects over the MTEF, we are the stimulus before the stimulus package,” he said.
Macozoma said the construction industry, while being at its lowest levels currently, was poised to pick up and restore its market status owing to projected growth of the residential, energy, transport and logistics businesses.
But Macozoma said that if the history of road funding was anything to go by, South Africa needed to return not to the 2010 construction boom but to the investment period of the mid-1970s to 1990s.
Macozoma attributed the impasse at National Treasury to supply chain reforms in government that sought to strengthen good governance in the procurement of infrastructure projects.
However, he said there were “serious unintended consequences” that must be addressed with the National Treasury, including project delays and cancellations, and conflict with construction general conditions of contract.
Webster Mfebe, the chief executive of Safcec, said the stimulus and recovery package recently announced by President Cyril Ramaphosa that prioritised infrastructure spending as a key driver of economic activity required a construction industry body that was ready to deliver.
But Mfebe said the lack of work was beginning to deplete the construction industry’s capacity.
“If not attended to expeditiously, it will render the local industry hopeless, thereby allowing foreign contractors to dominate the construction sector.
“The rest of Africa is currently experiencing the consequences of the demise of their construction industry. This, among other things, opens a door for the economic colonisation of Africa – the new threat being the ‘Chinalisation’ of Africa, where government to government investments are prioritised over business to business investments. This scenario can only make foreign companies ready to deliver while the local industry will be completely decimated,” he said.
Isabella Makuta, the president of Safcec, said construction industry trading conditions had become more than dire, with the industry confronted by a litany of challenges and witnessing company closures and downsizing, including job losses at unprecedented levels.
Makutu said the likely delay in the implementation of the envisaged R400bn infrastructure programme might spell the demise of many key players in the industry.
“A jobs bloodbath will be a natural outcome of such unfortunate circumstances. This can and must be avoided,” she said.