Infrastructure Cluster response to State of Nation Address
14 Feb 2011
A media briefing was delivered by the Minister of Transport Mr Sbusiso Ndebele and Minister of Environmental and Water Affairs Ms Edna Molewa on infrastructure roll out, and how this would be used for the creation of much-needed jobs. Journalists asked questions about the sustainability and permanence of jobs on road maintenance, what was intended to be achieved with the funding for Eskom, where the money needed for road maintenance backlogs would be found, whether there were sufficient road engineers and road superintendents employed and available, and whether the money for road maintenance would be ringfenced for such maintenance only. They asked about the ticket prices for the Gautrain, and whether it would co-exist with the Business Express. Journalists enquired about when the new rolling stock for the Passenger Rail Agency of South Africa and Metrorail was likely to be introduced, where it would be sourced, how much it would cost, whether it was not more cost-effective to use local skills, and what foreign investors could offer. Further questions related to whether there had been sufficient public engagement on the introduction of toll roads in
Hon Sbusiso Ndebele, Minister of Transport, and Hon Edna Molewa, Minister of Water and Environmental Affairs, briefed the media on government plans for infrastructure roll out. The purpose of the roll out was to upgrade the ageing infrastructure, to accelerate economic growth, and to further job creation, as pointed out by the New Growth Path and the President during the most recent State of the Nation Address (SONA).
Question & Answer Session
Q: A Sowetan reporter asked for a breakdown on the R549 billion that would be spent on Eskom, and the 70 000 jobs that would be created by the Sihambasonke Project. She asked if that figure was calculated using the Expanded Public Works Programme (EPWP) one-day-job model.
A: Hon Minister Ndebele replied that the 70 000 jobs were sustainable, and road maintenance was permanent in nature. New roads would be built and old ones would be maintained. He said that the state of the roads at provincial and national level was poor, so that they needed regular maintenance. He cited an example of a group of women that had been running a road maintenance cooperative since 1997 and who now had a healthy bank balance of R10 million.
Hon Malusi Gigaba, Minister of Public Enterprises, added that insofar as the figures mentioned for Eskom were concerned, the Medupi, Kusile and Ingula power station were some of the power stations that were already built or had been revamped to have more capacity. He said that there were other projects, such as the
Q: An Eyewitness News reporter asked for a figure on the number of permanent jobs that would be created by the infrastructure development project.
A: Minister Ndebele explained that 120 000 jobs would be created.
Q: A journalist from Beeld asked about the Gautrain route between Tswane and
A: Mr Lucky Montana, Chief Executive Officer, Passenger Rail Agency of South Africa (PRASA), said that the service operator Mbombela would announce the pricing model in March 2011. It was still working on the costing model.
Q: A journalist from Independent Newspapers noted that the Gauteng Freeway Project and the tolling in that province were having an impact on the price of food and general transport of goods and commodities in that region. He asked if the government was satisfied that sufficient public participation had taken place on that process before it was decided what charges were going to be made. He also asked how many road engineers and road superintendents were currently employed.
A: Minister Ndebele explained that
Q: A journalist from Beeld asked which other metros were likely to also have a similar tolling system imposed, and whether it was likely in other provinces.
A: Minister Ndebele explained that
Q: A journalist from Die Burger asked about the funds which had been mentioned for road maintenance, and whether these would be put into a dedicated fund only for road maintenance, or whether it was to be paid to the municipalities to do as they wished with it.
A: Minister Ndebele replied that the funds for the road maintenance were provided in a dedicated fund and each province had a task team that had been set up specifically to deal with that issue.
Q: A journalist from The Sunday Times asked what would happen to the Business Express running between
Q: An SABC journalist asked about new rolling stock for Metrorail and PRASA. The presenters had admitted that the rolling stock was more than 53 years old. From his experience of taking the train every day, he described it as “terrible” and “a death trap”. He wondered when
Q: A journalist from Media 24 asked what the estimate was of the skills that were required in the Cluster. She also wondered how much more funding would need to be obtained from other investors, and what countries were likely to invest, noting that mention had been made of
A: Minister Malusi Gigaba replied that the project was permanent. All entities in the Cluster were doing an audit of skills shortages, with the aim of upskilling people who did not have the required skills. The Cluster was in discussions with the Department of Higher Education and Training, around using Further Education and
A: Minister Ndebele added that the Gautrain was built with the help of foreign construction firms, but they trained South Africans, and the plants where the most of the coaches were assembled were in
Q: A journalist from New Age asked for clarity. Mention had been made that 70 000 jobs would be permanent jobs, and he asked if that meant that the remainder of the 120 000 jobs would not be permanent”.
A: Minister Edna Molewa said that she was not speaking for the transport sector, but that the Trans Caledon Tunnel Authority (TCTA) project had been raising funds for water infrastructure, such as the three dams that would be constructed in the near future. She said that the Development Bank of Southern Africa (DBSA) was helping in securing the needed funding. The water services were less funded because the municipalities did not have funds to maintain such infrastructure as leaking underground pipes.
Q: A reporter from Rapport asked if any of the funding for water infrastructure was directed to providing cleaner water, since in the previous year there were poor “Green Drop” reports.
Q: A further question was asked about the pumps that were supposed to be brought to pump out the acid mine water. The previous Minister had said that this needed to be done within the following 17 months, but that the problem was lack of funding, since Government at that stage had only R14 million of the R280 million that would be needed for the pump.
A: Minister Molewa explained that there was sufficient money available for the first area that needed to be pumped, and all details would be given at a later stage. The Department of Water and of Environmental Affairs could use the Water Act to penalise polluters. The Water Infrastructure Project was important in making sure that the sewerage did not leak into clean water reserves. Her Department would ensure that water pollution was properly policed and maintained.
Q: A journalist from Beeld asked the Minister of Transport to clarify whether the road engineers and superintendents, who were apparently to be deployed all over the road network, would be sourced from the government or private sectors. Thousands of kilometres of both Provincial and District roads needed maintenance. A further question was whether the Sihambasonke Project would start from April 2011.
A: Minister Ndebele mentioned that there were joint ventures with the other departments such as the Department of Public Works, to supply each other with necessary skills. There were some skills but they were not sufficient. Provincial superintendents were responsible for inspecting provincial roads, while the transport engineers would be responsible for fixing the problems. The Department welcomed reports from the public about the potholes and other road problems, so that they could be fixed immediately.
Q: A journalist from Independent Newspapers asked about transfer of skills. The high speed rail links and Gautrain were the first major projects. Mention had been made of French, Chinese and Canadian involvement, but the question was whether there were not sufficient local skills now, and whether these skills had not been transferred. He was concerned about the cost of foreign assistance.
A: Minister Ndebele replied that big projects, like the building of World Cup stadiums, could only be undertaken by the five largest construction firms in the country, such as Murray and Roberts. The same five companies were simultaneously undertaking projects in
Q: A journalist from Die Burger asked whether PRASA would be buying or leasing the 8600 new coaches by 2014, and asked, in the event of lease, from whom they would be leased. He also asked what costs were involved.
A: Mr Montana explained that the 8 600 coaches for Metrorail trains and 2000 coaches for long distance rail would be purchased from 2014, and that this would cost R80 billion. PRASA would buy the original technology from Bombardier-Siemens, who would then build plants in
Q: The journalist from The Sunday Times referred to a comment on a feasibility study into a high speed rail link between
Q: A journalist asked whether the Water Act could be used to claim money in respect of acid mine water from the mining houses, and how the water polluters would be penalised.
A: Minister Molewa explained that the Acid Mine Drainage pumps would be used in Krugersdorp, where the mines had been closed down for some time due to non productivity. Some mines in
The briefing was adjourned
Briefing by Minister of Transport, Chairperson of the Infrastructure Development Cluster Mr Sibusiso Ndebele, MP held in Parliament, Cape Town on 15 February 2011
A very good morning to you all, and welcome to this post-State of the Nation (SoNA) media briefing to articulate the delivery programme of the Infrastructure Development Cluster, as outlined by President Jacob Zuma on 10 February 2011.
The work of the Infrastructure Development Cluster emanates from Outcome 6: An Efficient, Competitive and Responsive Economic Infrastructure Network. On 29 October 2010, the Infrastructure Development Cluster Ministers signed their Delivery Agreement with President Zuma.
KEY RESPONSES BY THE INFRASTRUCTURE CLUSTER TO SONA
In his address on 10 February 2011, President Zuma referred to the expansion of digital services, water, electricity and transport infrastructure as essential to drive economic growth and to provide jobs for all our people. Through Outcome 6 of the 12 Outcomes of government we seek to devise corrective measures and interventions to enable government to ensure maximum impact of infrastructure investment in economic growth. In order to address its mandate the Infrastructure Development Cluster sectors have a responsibility to focus on the following identified areas:
· Insufficient and inadequate infrastructure;
· Uncompetitive environment and weak regulation;
· Lack of infrastructure maintenance and refurbishment; and
· Operational inefficiencies.
Last year we announced an infrastructure budget increase from R784 to R846 billion over the medium term expenditure period making it one of the largest expenditure programmes in the history of this country. The accelerated infrastructure programme allowed us to deliver a successful 2010 FIFA World Cup and set our country firmly on the growth path. This expenditure is credited with shielding
Several urgent projects in the infrastructure cluster are being rolled out in order to place
- SECURING ELECTRICITY SUPPLY FOR JOBS AND ECONOMIC GROWTH
- Eskom has spent over R75.5 billion on the capital investment programme since 2005 and has delivered some 5 031 Megawatt of new electricity generating capacity into the system as well as thousands of kilometres (3 051 km) of high voltage transmission lines to transport that electricity across the country.
- Eskom's approved build-programme including the completion of Kusile Power station in 2017 will spend another R549billion.The timely completion of Eskom's build programme up to 2017 is critical in ensuring
's security of electricity supply. Up to 2017, the country will however need additional investment in new electricity generating capacity by the private sector over the next few years up to the delivery of the first unit of the Medupi Power Station. South Africa
- Eskom through its Medium Term Power Purchase Program (MTPPP) has signed agreements with three Independent Power Producers (IPPs) since April 2010, totalling some 277 MW with a number of contracts in the final stages of completion which will bring the contracted power purchases to around 400MW this year.
- Eskom has embarked on returning to service it's previously "mothballed" coal-fired power stations,
Camden(located near Msukaligwa/Ermelo), Grootvlei (located near Dipaleseng/Balfour) and Komati(located near Middelburg) after a period of approximately 20 years in long-term storage. The total RTS (return to service) portfolio will add 3 800 MW nominal capacity to the national electricity supply system. The Camden Power Station was officially launched by President Jacob Zuma in October 2010.
- Eskom has taken measures to increase its coal stockpile average stock days to ensure that the targeted 42 days average across its power stations is met.
's longer-term electricity supply needs will be directed by the Integrated Resource Plan for electricity which is currently being finalised. South Africa
- The plan will determine the energy mix and associated funding requirements for the next 20 years. Energy Efficiency will play an increasingly important role in our country going forward and is crucial if we are to see the next 2-3 years through in the context of a constrained electricity supply-demand balance.
- The prudent use of electricity by all South Africans, including households, industry, government and business, will assist Eskom in its resolve to keep the power on. All of us need to abide by the rule, "If you're not using it, switch it off."
- SECURING FUNDING FOR ELECTRICITY
- Budgets for infrastructure projects remain a challenge across the cluster and not least in financing mega projects for electricity. Government has come to the table and provided needed support to Eskom with a R350billion guarantee framework. This will minimise the impact on electricity tariffs by enabling greater levels of borrowings from capital markets at the lowest possible interest rates.
- Government has also provided Eskom with much-needed equity in the form of R60billion subordinated loan to shore up its balance sheet which has also served to improve its access to debt funding. Work is ongoing to find sources of funding to further strengthen Eskom's balance sheet without placing undue pressure on the fiscus.
- Eskom has submitted US$ 350 million loan application to the World Bank, African Development Bank and other co-financiers through the Clean Technology Fund(CTF), to finance a 100 MW Concentrated Solar Power Plant and a 100 MW Wind Power Plant. The CTF appraisal team was in
(7th February to 12 February 2011) and the final outcome is expected in June 2011 at the very latest. South Africa
- Eskom intends to play a very significant role in the realisation of the targets set in the New Growth Path till 2015. A youth programme that supports about 5 000 young people to find their way into employment (up from 200) will be implemented. Eskom will provide apprenticeship to 10 000 young people in its pipeline (up from 4 500). Furthermore, it is estimated that 100 000 people will be employed or find employment through direct and indirect jobs in the new build programme.
- WATER SERVICES AND INFRASTRUCTURE
- The Department of Water Affairs has identified growth seven (7) new augmentation water resources infrastructure projects to support the domestic, industrial, agriculture and energy sectors. Preparations are on track for the completion Vaal River Eastern Sub-System Augmentation Project (VRESAP) in
as per the plan (i.e. May 2012). Also, preparations are on track to implement the Komati Water Augmentation Scheme (KWAS) in Mpumalanga; Mokolo from Crocodile Water Augmentation Project (MCWAP Phase 1) in Limpopo and Raising Hazelmere Dam in KwaZulu-Natal. Mpumalanga
- The Department of Environmental Affairs led a process of formulating an effective and comprehensive national response to climate change through the Green Paper on a National Climate Change Response, which has now been gazetted for public comment.
- Upon receiving comments and suggestions on the Green Paper the department will lead the drafting of the White Paper which should be completed by June 2011. The policy outlined in the Green Paper serves as the embodiment of the South African Government's commitment to a fair contribution to the stabilisation of global greenhouse gas concentrations in the atmosphere and the protection of the country and its people from the impacts of climate change.
- It presents the Government's vision for an effective climate change response and the long-term transition to a climate resilient and low-carbon economy and society - a vision premised on Government's commitment to sustainable development and a better life for all. Over the period 2011/12, 2012/201 and 2013/2014 the DWA will create 20792, over 23000 and 21909 jobs through Water Augmentation, rehabilitation and refurbishment
- COMMUNICATION INFRASTRUCTURE
- Broadband Infraco continues to invest in its national backbone fibre optic network with R243 million spent in the 2009/10 financial year. Broadband Infraco's fibre optic cable network now covers approximately 12 250km country-wide which enables the country to extend connectivity to the SADC Region to countries like
Lesotho, Namibia, Botswana, Mozambique, Zimbabweand . Swaziland
- The 2010 Legacy Implementation plan was developed in June 2010 and is ready for implementation during February and March 2011. The two legacy projects are:
(a) The 2010 FIFA World Cup equipment that will be redeployed to two host cities (
(b) The Sentech Second Teleport that was established for the 2010 FIFA World Cup scope is now treated as a separate project, and we are awaiting the renewed 2nd Teleport proposal with costs and timelines. The remaining funds/savings of the 2010 Sentech project will be utilised for this purpose. The implementation of this will commence before March 2011, but will roll over into April and May 2011.
4.1. DIGITAL TERRESTRIAL TELEVISION (DTT)
Cabinet recently endorsed a decision by SADC to adopt the DVB-T2 technology standard for the implementation of the Digital Migration process. Cabinet further adopted December 2013 as the switch-off date of the analogue signal to the digital signal.
This process will contribute to government's job creation programme in manufacturing, packaging, distribution, installation, maintenance and content production. The migration process will result in the creation of more TV channels, therefore increasing the demand for more content. Government intends utilizing the migration process as a catalyst for the resuscitation of the electronics manufacturing industry and to create more opportunities for the content production industry.
- TRANSPORT INFRASTRUCTURE
The cluster is today reporting to you on three critical interventions in the transport sector. These are Road Maintenance, Rail modernization programmes and the Modernisation of our long-distance passenger and freight services.
5.1ROAD MAINTENANCE PROGRAMME
- In this regard we are rolling out the S'HAMBA SONKE(Walking Together) PROGRAMME, a new and innovative nationwide drive to focus on the maintenance of our secondary road infrastructure using labour intensive methods of construction and maintenance. We have set aside R6.4 billion in 2011/12, R7.5bn in 2012/13 and R8.2bn for 2013/14 amounting to a total of R22.3bn in the medium term. At least 70000 jobs will be created in 2011 through this programme.
- Historically as a country we have invested mainly in the construction of roads without striking the balance between maintenance and construction. The international benchmark is a 60/40 split between maintenance and construction. In
the reverse applies and this programme is aimed at matching the international benchmark. South Africa
- S'HAMBA SONKE includes a massive pothole patching programme that will be rolled out nationally with immediate effect. Potholes will be patched nationally. We will launch a Pothole hotline for road users to report potholes. S'HAMBA SONKE will no doubt arrest the decline of our infrastructure and create thousands of jobs.
- Engineers and superintendents will be deployed all over our network with the responsibility to address potholes. They will be charged with driving up and down stretches of road every morning in order to determine the daily condition of our road network. In this way potholes will be identified early and be fixed early.
- We will streamline the procurement process so that the necessary skills, inputs are sourced through a specially designed procurement regime to ensure provinces are ready to implement including setting up project management units in all provinces and nationally to ensure we are ready to roll by the beginning of the financial year.
- We will also explore the use of alternative technologies for the patching of potholes and the maintenance of roads.
- The question of roads financing is a challenge we face as a country. We have therefore decided to host a roads funding conference in March in
to which we will invite the roads sector to debate and recommend future funding options. We will look at options such as public partnership; user pays principle and other potential sources of funding so we avoid overburdening the user. Durban
- The Johannesburg OR Tambo Airport Tshwane radius is a good example of the questions we face when having to build necessary and urgent road infrastructure. Congestion on
Gautengroads especially between the OR Tambo International Airport, Tshwane and cannot be resolved only through building new roads. A more sustainable approach is to increase the number of choice alternatives to the road user. Johannesburg
- As a result of recent interventions by DOT the user in
now has more choices. They will be able to choose between the GAUTRAIN, the Gauteng Freeway between Johannesburg-Tshwane and ORTIA, the PRASA Commuter and Business Express and the alternative routes. Both the Johannesburg-Hatfield route and the Gauteng Freeway Improvement increase viable options for the road user in Gauteng . All these projects at a total cost of about R60bn come at a cost. The question Gauteng must ask is where the cost should be located. South Africa
5.2 RAIL MODERNISATION PROGRAMME
The Gautrain forms an integral part of our rail modernisation programme. It provides our country's busiest road network, the heart of Africa's largest economy
Starting in June 2011, the Gautrain will move at least 40 000 people hourly on the commuter line between
The delivery of commuter focused passenger services has been implemented no better than in
Since inception in August 2009 Rea Vaya has transported approximately 8 million commuters. Every day 30000 passengers, some of them previous users of private vehicles, now use the Rea Vaya. Early this month we handed over the Rea Vaya project to a group of former taxi operators for them to run as part of the integration and efficiencies we are introducing to provide better public transport services for commuters. We have also successfully introduced the PRASA/Metro Rail Business Express between
For freight and mass commuter movement rail is a key mode of transportation for the
Ø About 97.5 % of the rolling stock currently in operation dates back to the late 1950s and the last new trains, comprising only 2.5 % of the commuter rail fleet, were purchased in the mid 1980s.
Ø The systems technology on this fleet is old and inherently obsolete and is therefore costly to maintain or refurbish and upgrade.
Ø The average age of the coaches is over 40 years.
Ø The life expectancy of the rolling stock is in the order of an average 54 years.
Ø The norm around the world is for the coaches to be upgraded at 27 years, and overhauled every 9 years. This is to ensure that the structural and sub-systems integrity is not compromised by metal fatigue, age, wear and tear or environmental condition.
Ø Yet thirty-three (33%) of our fleet is already above 36 years and therefore would be uneconomical to upgrade and unsafe to operate.
5.3 MODERNISATION OF OUR LONG-DISTANCE PASSENGER AND FREIGHT SERVICES
· The modernisation and upgrade of our infrastructure is therefore an urgent matter which cannot be delayed any longer. At the same time as we build congestion free highways in
· The average age of the locomotive fleet operated by Shosholoza Meyl on all routes nationally is of the order of 33 years.
· Of Shosholoza Meyl's current locomotives stock of 124, approximately 65% (about 80 locomotives) should have been replaced by 2010 and a further 20% (about 26 locomotives) should be replaced by 2024 on account of age.
· Of the passenger coach fleet, 8% (about 103) of the coaches will have to be replaced in 10 years' time and a further 14% (about 182) should be replaced in 15 years' time
It is quite clear that infrastructure across the cluster requires massive investment. There are generally three sources of funding for transport infrastructure
- Private Investment.
- User pays principle
As a country we have accepted that to sustain investments we need a combination of the three. Our initial estimate for the roads sector alone is R75bn just to deal with the maintenance backlog, for commuter rail services R93bn, Shosholoza Meyl requires investment ranging from R260-300billion! These are staggering figures by all standards. Some countries like
Over the next six months, starting with the Roads Conference in Durban in March to our International Investors' Conference in June we will be engaging broadly to find financing options for our projects. We must ensure that the projects are funded through an equitable split between private users and funders.
More than any other in
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