Budget: State to spend R800bn on infrastructure

2011-02-23 13:03

Finance Minister Pravin Gordhan today announced infrastructure

spending of R800 billion over the next three years to boost the economy and

create jobs.

The money will be spent on new power stations, roads and rail

facilities, schools, hospitals and government buildings, with a special focus on

ensuring security of electricity supply and improving transport facilities to

support trade.

The biggest project under way, Eskom’s Medupi power station, is

expected to cost R125 billion.

Transnet’s multi-product pipeline and the freeway

improvement scheme will cost just over R20 billion each, while the state will

also spend R8.3 billion on building and bettering schools.

“To grow the economy more rapidly, South Africa needs sufficient

electricity to run factories, mines, schools and households; well-maintained

road and rail networks to transport people and goods; ports and pipelines to

facilitate domestic and international trade,” Gordhan said.

But he cautioned that the public sector’s record on infrastructure

spending was “not great”, and said Treasury would tighten control on the way

projects were appraised.

In 2009/10, the public sector failed to spend R12.4 billion of its

capital expenditure budget, with municipalities failing to spend 17 cents out of

every rand allocated for infrastructure.

The minister said government had adopted a new approach to planning

for major new infrastructure projects, notably in housing and public


“To reduce bottlenecks in infrastructure planning and approval,

National Treasury is developing a framework for appraising public sector

infrastructure problems.”

Government would build capacity in provincial departments to enable

them to roll out infrastructure projects more constructively, and set up a

specialist support programme to help rural municipalities implement


The minister said the expanded public works programme, which aims

to create 4.5 million work opportunities between 2009 and 2014, is expected to

spend R1.5 billion in 2011/12, and steadily increase this to R2 billion by


The programme will be allocated R73 million over the next three


It should see 6 000 young people trained in artisan trades by 2014,

and the department of public works would see to it that at least 15% of those

who come through the national youth service programme are placed in employment


Gordhan said massive investments in power supply and the road and

rail network, including Transnet’s, would be funded largely through borrowing,

and the costs would be “recovered from future electricity consumers and road



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