SA govt launches bid window to help get mega infrastructure projects off the ground

The South African department of public works and infrastructure has opened a first-of-its-kind bid window, offering preparatory support to large public sector projects that can catalyse economic growth.



Minister of public works Dean Macpherson described the initiative as a crucial step to expand infrastructure investment, economic growth and job creation in SA during the launch of the bid window in Johannesburg on Tuesday.



“Infrastructure development touches every aspect of our lives, from the water we drink to the roads we drive on, and it has the power to transform not only our economy but society as a whole,” he said, adding:



“The project preparation window we are unveiling today is a game changer. For far too long, one of the major barriers to infrastructure development has been the lack of sufficient project preparation support.”



The bid window calls for submissions from public sector entities for projects that are R1 billion or larger and which have the potential to crowd in investment from the private sector or sources alternative to the national fiscus. Priority sectors for projects include energy, water, transport and municipal infrastructure, among others.



The project preparation support will be provided by Infrastructure South Africa (ISA), a unit that was previously housed within the presidency and now reports to Macpherson.



Mega projects



ISA acting head, Mameetse Masemola, said the unit would provide support in terms of funding or financial structuring support, technical support, legal support and institutional or governance arrangements.



The newly launched bid window builds on 12 infrastructure initiatives that were unveiled by President Cyril Ramaphosa in March this year and that are benefitting from project preparation support provided by ISA and funded by a Treasury allocation of R179 million in the first year.



The bid window launched on Tuesday offers a transparent and coordinated way to replenish ISA’s pipeline of mega projects, Masemola said.



Macpherson said the project preparation initiative would help to “turbocharge” investment in SA by ensuring that more infrastructure projects are shovel-ready sooner and are of high quality while also increasing the trust the private sector has to invest in such public projects.



The initiative is expected to contribute to economic growth, with research from international organisations like the World Bank and the International Monetary Fund finding that a 1% increase in infrastructure investment can contribute up to 3% to domestic economic growth.



Without the private sector, whether it is in construction or financing, the government’s infrastructure plans are not going to be fulfilled in their entirety, Macpherson said.



Ongoing work



He acknowledged some constraints remain around public-private partnerships that are being worked out by the National Treasury, “but where there are tariff-related infrastructure projects – particularly in water, electricity, road and transmission – that is where the private sector is desperate to get involved,” Macpherson said.



There is also an appreciation that the government must contribute to derisking those projects, particularly in water, by removing the risk of non-payment and that the project is bankable and feasible, he said.



Offering an example, the minister said the bid window offered an ideal opportunity for projects related to municipal infrastructure, which is currently in a severe crisis.



He called on municipalities to take up the opportunity to work with ISA and the department to “package, prepare and deliver credible projects that can also leverage private sector financing ... And if we get that right, then there is scope for us to broaden that so that we see something for the R950 billion that’s spent on infrastructure every three years.” – FIN24