NOT CAST IN STONE: The business case must be developed for the  government's infrastructure projects, says minister. THE TIMES
NOT CAST IN STONE: The business case must be developed for the government's infrastructure projects, says minister. THE TIMES

ECONOMIC Development Minister Ebrahim Patel put the government's ambitious infrastructure programme on show last week at a conference on infrastructure and development hosted by his department.

Even though the biggest achievement was a public relations one, it was nonetheless important: building national enthusiasm and belief in the programme is, at this stage, the most immediate priority.

The 17 strategic projects - which in turn include hundreds of smaller projects - selected by the Presidential Infrastructure Co-ordinating Committee, of which Mr Patel chairs the secretariat, are all in various stages of conceptualisation. It is too early to say whether all of them will happen and too early to say how all will be funded.

Among the three that could arguably be called the biggest - rail, road and water infrastructure for the Waterberg; the Durban-Free State-Gauteng logistics corridor; and the Saldanha -Northern Cape development corridor - there is a high degree of certainty, mainly due to the involvement of Transnet, which has had many of these projects on the table for some years.

Although the funding is still uncertain, Transnet's group CE Brian Molefe has expressed "supreme confidence" that all rail and port projects will be financed through Transnet's increased revenues and debt.

The social infrastructure programmes - hospitals, school-building and municipal infrastructure - are probably the easiest to execute: they do not have a high degree of complexity and the money is already in the budgets of provinces and municipalities. What is required now is a delivery mechanism - such as a national agency - to do the work. Mr Patel says that the point of including these projects in the programme is to use the political muscle of the Presidency to make them happen.

Among the least certain are projects still in the feasibility stage, such as the Umzimvubu Dam, which aims to kick-start small-scale farming in the Eastern Cape and has been packaged with improvements to the N2 highway for access to markets.

The same goes for the proposed Mthombo oil refinery for Coega, which the Eastern Cape province is lobbying for but the Treasury is opposing. A multibillion-rand refinery for Port Elizabeth makes little sense when Transnet has just spent R23,4bn on a new pipeline from Durban to Gauteng.

Mr Patel, whose job at the conference was to sell the ambition and grand scale of the infrastructure vision to the rest of the government and to business and labour, says the 20-year plan is not cast in stone. "Some of the underlying projects will fall away and others will be added. In the bulk of them, the inherent value is clear, but the business case needs to be developed and tied to a particular price."

The objective, he says, is to establish a 20-year rolling plan that can be adapted through an exploratory process.

A technical team assembled by the presidential committee has done some initial modelling, pointing to the first steps and warning of possible obstacles.

One is the regulatory nightmare that confronts developers of large projects. Quoting the example of an Eskom project to build a transmission line, it warns that gaining land permissions - through expropriation and environmental impact assessment - can take an inordinate time. In the example, land approvals took six and a half years to secure.

Mr Patel says the government is drafting an Infrastructure Development Act that is intended to circumvent some of the red tape.

For Mr Patel, a consummate negotiator, last week's conference was also about gently manoeuvring his social partners. It was no accident that the keynote speaker, Nobel economics laureate Joseph Stiglitz, endorsed one of Mr Patel's pet projects: the idea that retirement savings should be channelled into investment in infrastructure.

In the final session of the conference, business leader Bobby Godsell and Zwelinzima Vavi, general secretary of the Congress of South African Trade Unions, both made guarded commitments to this. Mr Godsell said a society-wide discussion was needed on the concept of "a reasonable return" for investment, while Mr Vavi said he backed plans to introduce mandatory savings for all employees.

patonc@bdfm.co.za