RENEWABLE energy will loom large this year after 28 projects worth R49bn were awarded in the first round of tenders, the South African Federation of Civil Engineering Contractors said.
This will provide impetus for South Africa’s construction and engineering sector, which is still struggling to bounce back from global recession and years of declining state spending.
"The first round has started — all 28 projects have reached financial closure and are under way," Norman Milne, the federation’s president, said on Friday.
He said the projects, including wind and solar energy, would take between a year and 20 months to complete, subject to strict penalty clauses, despite the multiple delays that marked progress before sign-off.
Nineteen second-round projects worth R28bn have also been closed, while third-round projects were expected to reach sign-off in late August.
Mr Milne said South African engineering firms would conduct earthworks and build infrastructure for the projects, but 30% to 40% of all project costs would be imported. "Unfortunately in all instances the actual technology comes from overseas."
Funding by domestic banks and syndicates was allied with developers taking equity of about 15% in each project.
Eskom would buy the power generated, but renewables tariffs would be more expensive than Eskom’s base pricing. But second and third round projects would benefit from state and private parties having learned the ropes, and is likely to be more competitive and have higher levels of localisation.
However, on Friday, Consulting Engineers South Africa CEO Graham Pirie said the report by the auditor-general pertaining to the use of consultants by the government " is a worry, because the report does not differentiate the disciplines of the consultants and sort of paints everyone with the same brush".
He said there were no proper management controls in place in terms of contract payments. This was evident, as state entities still owed R1bn in delayed payments to consulting engineering firms.
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