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Growth of Sa's Road Infrastructure: What To

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Growth of Sa's Road Infrastructure: What To GROWTH OF SA’S ROAD INFRASTRUCTURE: WHAT TO EXPECT SKHUMBUZO MACOZOMA CHIEF EXECUTIVE OFFICER SANRAL SOUTH AFRICAN FORUM OF CIVIL ENGINEERING CONTRACTORS | LR 2/6/3/138 IN ORDER TO DEFINE A FUTURE – IT MUST BE PROPERLY CONTEXTUALISED NATIONAL DEVELOPMENT PLAN o Too few people work o Goal is to eradicate poverty and inequality Acknowledgement that national o The quality of school education for o development is not linear but rather black people is poor cyclical – opt for a virtuous cycle where Infrastructure is poorly located, o one element feeds off of another or inadequate and under- enables another maintained o Infrastructure is a catalyst but not a o Spatial divides hobble inclusive panacea – the economy must grow development o Roles of Govt and Private sector are distinct and not inter-changeable South African Forum of Civil Engineering Contractors | LR 2/6/3/138 2 WHAT THE NDP 2030 SAYS o GFCF at 30% of GDP o Public infrastructure investment at 10% of GDP financed through tariffs, PPPs, Taxes and Loans and focused on Transport, Energy and Water. o New spatial norms and standards o Faster and more inclusive economic growth o SA needs to fix the future - Starting today o Focused leadership (long-term) o Support for plans (participation and consultation) o Institutional capability (capable developmental State) o Resource mobilisation and agreement on trade-offs (some things may have to wait) o Sequencing and willingness to prioritise (focus on a few strategic priorities) o Clarity on responsibility (and hence accountability) South African Forum of Civil Engineering Contractors | LR 2/6/3/138 3 1998-2010: Horizon 2010 SANRAL - OUR JOURNEY • Road network growth • Intro of private finance • Accelerated investment • Regional trunk network ROAD NETWORK • Technical Excellence o Growth from 6700km to 22000km • Support for other roads authorities o What next? – 25000km or 35000km? FUNDING 2010-2020: MTSF 2015 and 2019 o Growth from R1.2bn to R20bn o Non-Toll: R15bn; Toll: R5bn in 2017 • Road network growth o Public & Private funds – R15bn in 2009 • e-Toll and toll uncertainty National Treasury custodian of funding policy o • Economic slowdown – less funds TOLL ROADS • Reputation & public trust deficit • Leadership transition o 2952km or 13% of SANRAL network o R128bn worth of projects uncertain o Call for new toll roads policy Urgency of resolution of e-Toll debacle o 2020-2030: Horizon 2030 ORGANISATION • Focus on long term visioning • Review of network growth o Staff growth from some 89 staff to 359 staff since 1998 o Operating model review • Review of funding model o Institutional strengthening • Long term roads plan STRATEGY • Review of SANRAL mandate • Review of RA support model Departure from Horizon 2010 approach o • Emphasis on relevance o 1. Visioning – 2. Planning – 3. Funding • Aggressive transformation agenda South African Forum of Civil Engineering Contractors | LR 2/6/3/138 4 SANRAL MTEF BUDGET 2017-2019 MTEF 309 Projects R50.7 billion South African Forum of Civil Engineering Contractors | LR 2/6/3/138 5 NON TOLL BUDGET (R’000) South African Forum of Civil Engineering Contractors | LR 2/6/3/138 6 THE OTHER HALF OF THE STORY Initial Capital Project Costs Current Status Designation - Toll (R’000 2014R) GFIP Phase 2 (New Routes) R 25 768 840 GFIP Phase 3 (Upgrades) R 17 655 160 R300 Cape Town Ring Road R 4 861 600 N1/N2 Winelands R 9 316 100 Joint Planning and Reprioritisation Toll abandoned N2 Botrivier to Port Elizabeth R 11 272 540 Basic Planning (Non-Toll) N2 Wild Coast (Ndwalane to Haul roads construction underway R 7 578 656 O&M Toll Funding Model Agreed Mtamvuna River) (SIP 3) Mtentu bridge awarded SANRAL KEY MEDIUM N2 Durban South (Prospecton) to North R 7 847 000 Detail Design (non-toll) TERM PROJECTS (Umdloti) N2 Richards Bay to Ermelo R 7 284 140 Detail Design (non-toll) N3 Pietermaritzburg (Twickenham) to Durban (EB R 15 777 205 Detail Design (non-toll) Cloete) (SIP 2) New alignment required – Van N3 De Beers (SIP 2) R 5 500 000 Reenen Development Project Detailed investigations underway N4/PWV3 extension Pampoen Nek Construction Started R 1 716 900 Toll abandoned Pampoen nek construction (Non Toll) N12 Johannesburg to R 2 731 700 Basic Planning (Non Toll) Klerksdorp N12 Benoni to Witbank R 811 840 Basic Planning (Non Toll) R72/N2 Port Elizabeth to East Detail Design, Phased Construction South African Forum of Civil Engineering Contractors | LR 2/6/3/138 R 6 301 200 London Started (Non Toll) 7 SANRAL Funding Trend R 40 000 000 FUNDING LANDSCAPE R 35 000 000 R 30 000 000 ROAD NETWORK R 25 000 000 R 20 000 000 2030 Roads Plan to inform future national roads projects o Rand ('000) o Network management to be informed by funding policy R 15 000 000 position adopted o New roads, road transfers, capacity expansions and R 10 000 000 improvements face the biggest risk R 5 000 000 FUNDING R 0 Funding envelope threatened – need decision on roads o Financial Year funding Toll Non Toll Other Total Note: 5% Annual Non Toll Budget Increase o Budget per/km severely constrained Quality index vulnerable Budget per Road Kilometre Trend o 35 000 R 2 000 000 o Trade-offs must be made R 1 800 000 30 000 RELEVANCE R 1 600 000 25 000 R 1 400 000 Drive projects with biggest development potential o R 1 200 000 o Community development projects 20 000 o Road safety R 1 000 000 Public transport enablement 15 000 o R 800 000 OWN REVENUE Network Length (km) 10 000 R 600 000 R 400 000 5 000 Join SA Inc in pursuing Africa and elsewhere R 200 000 o perBudget Kilometre(2017 ofRoadRands) o Best practice Roads authority support 0 R 0 o 1998 2002 2006 2010 2014 2018 2022 2026 2030 Year Network Length (km) + 2000 km/year Network Length (km) + 200 km/year South African Forum of Civil Engineering Contractors | LR 2/6/3/138 Budget/Km + 2000 km/year Budget/Km + 200 km/year Note: 5% Annual Non Toll Budget Increase8 SMME Budget Trend R 20 000 000 3000 TRANSFORMATION R 18 000 000 2500 R 16 000 000 R 14 000 000 2000 BUDGET TREND R 12 000 000 R 10 000 000 1500 o Black SMME Spend generally < 25% of budget o Black SMME Spend reached highest level of 83% of total R 8 000 000 Budget (R (R '000) Budget SMME Spend in 2009, but has since slipped to 50-55% 1000 Number of SMME R 6 000 000 o New PPPFA Regulations demand a MINIMUM of 30% sub- contracting for projects above R30m – SANRAL wants partners R 4 000 000 that will commit beyond the minimum 500 R 2 000 000 SMME DEVELOPMENT R 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 o The number of SMMEs out there is cause for concern – role of Year industry in creating sustainable SMMEs SANRAL Budget (Rbn) Total SMME Budget (Rbn) Black SMME Budget (Rbn) Total SMME No Black SMME No o SANRAL visibility in “development“ limited o Local SMMEs cry foul – Generally Grades 1-4 Black Owned Enterprises Appointed by SANRAL o SMMEs demand direct contracts with SANRAL 2015/2016 MISSED OPPORTUNITIES Total SMMEs Black SMMEs % Black SMMEs Localisation o Count Rbn Count Rbn Count Rand o Training Sustainable job creation o 2 056 3.6 1009 2.0 49% 55% o Cyclical development – alignment of key government interventions & private 2016/2017 RISKS Total SMMEs Black SMMEs % Black SMMEs SANRAL Office invasions o Count Rbn Count Rbn Count Rand o Project disruptions and paralysis of service delivery o Project delays and escalating costs South African Forum of Civil Engineering Contractors | LR 2/6/3/138 1 833 4.0 1045 2.1 57% 53% TRANSFORMATION Ownership • More aggressive demands on Large Construction Sector Equitable Access • Limitation of number of contracts per company per province and nationally • Equitable allocation of projects across CIDB grades • Balance of JVs and sub-contracting • Sanral to have more say in sub-contracting • Review of project packaging – size, duration, budget Community Empowerment • Direct benefit of communities in materials sourced locally Supply Chains • Create space for black business in rigid supply chains – materials, equipment etc. Competition • Create space for black business in Toll Operations and all supporting sectors in Sanral business SMME Development and Support • Sanral to play a more direct role in emerging contractor development South African Forum of Civil Engineering Contractors | LR 2/6/3/138 10 10 FLAGSHIP PROJECTS 2017-2024 Mtentu N2 WILD COAST bridge Ntafufu o Project Cost ~ R9bn 2 Mega Bridges – Mtentu Awarded; Msikaba Retender o Msikaba o Brownfields improvements – East London to Port St Bridge Johns Ndwalane Lusikisiki o Greenfields section – Port St Johns to Mzamba Access roads and Community Development projects o Port St Johns MOLOTO ROAD o Project Cost R5bn o 3 sections – Limpopo, Mpumalanga, Gauteng o Limpopo – Improvement of single carriageway o Mpumalanga and Gauteng – Dualling of carriageway o Access roads and Community Development projects South African Forum of Civil Engineering Contractors | LR 2/6/3/138 11 PROJECTED ROAD INFRASTRUCTURE TREND OVER NEXT DECADE NATIONAL ROADS o Sustained road maintenance levels – fundamental engineering approach o Non-toll network – capital expenditure on recently “transferred roads” to improve QI – is this the right focus? o Toll network – Delayed implementation of new major capital projects due to “anti-toll” drive and pressure on public allocations o Delivery of flagship projects - N2 Wild Coast; Moloto Road; Van Reenen Development Project o Toll Concessions – Maybe one, but highly uncertain PROVINCIAL AND MUNICIPAL ROADS o Pressure for capital investment on dilapidated and/or congested secondary strategic road network o Pressure for
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