Minister of Public Works and Infrastructure and the Head of Infrastructure and Investment in the Presidency briefed the Portfolio Committee on the country’s infrastructure investment plan.
The investment plan promises to address a history of massive infrastructure underspending by all spheres of government and state-owned enterprises (SOEs). The plan has also been conceptualised as part of the country’s strategy to revitalize the economy and reduce rampant unemployment. The COVID-19 pandemic and the downgrading of the economy has only made the crisis worse and increased the urgent need for infrastructure investment. There has been a 14.2% contraction in the construction sector which has been severely impacted by the pandemic, resulting in some of the biggest job losses.
The Minister said there is an urgent need for targeted infrastructure investment and reported that Public Works has developed and will be applying a new methodology known as the Sustainable Infrastructure Development System (SIDS) to guide the country’s infrastructure development agenda. A total of 276 projects with an investment value of more than R2.3 trillion has been submitted as of June 2020.
The Committee welcomed the focus that Department of Public Works and Infrastructure (DPWI) will be applying to develop the National Spatial Development Framework to address geospatial disparities arising from the former apartheid spatial plan and to ensure that communities are well integrated and connected to work opportunities.
Members raised concern that the presentation did not provide enough details on how DPWI will implement the infrastructure plan. Members asked for specific timelines for the projects DPWI expects to be implemented immediately. They asked how DPWI and the Committee will do oversight over projects once funds have been disbursed to municipalities and provinces. This is particularly important given the challenges that the Independent Development Trust (IDT) and the Property Management Trading Entity (PMTE) have experienced with collecting management and professional service fees from clients. Members indicated that the DPWI history shows legislation is a major weakness. What measures will it take to ensure the necessary legislative reforms exist for infrastructure development to be successful. The Committee agreed it needed to workshop the Infrastructure Development Act to understand the new infrastructure management role of DPWI and the move of the Presidential Infrastructure Coordinating Commission (PICC) from the Presidency to DPWI and its structures.
The Chairperson welcomed Minister de Lille, and Deputy Minister Kiviet. The Committee had been anticipating the meeting since President Ramaphosa’s State of the Nation Address (SONA) in which he announced the reconfiguration of DPWI to accommodate infrastructure development. The meeting would hopefully shed light on the role that would be played by DPWI as well as the Committee in its oversight.
Opening remarks by Minister of Public Works and Infrastructure
Minister Patricia de Lille highlighted that at the start of the Sixth Parliament, government was reconfigured to include Infrastructure in the Department of Public Works. This decision was officially gazetted by the President in August 2019. She said the Infrastructure Development Act of 2014 guides the implementation of infrastructure however no regulations have been designed for this Act. DPWI has since been involved in drafting these regulations which must be approved by the Presidential Infrastructure Council, chaired by the President. A meeting was scheduled for 17 June 2020 - this was unfortunately cancelled by the President.
DPWI has looked into what transpired during the previous administration, particularly the achievement of targets, many of which were not met. Additionally, DPWI has interrogated how to reorganise its structure, this has been done in consultation with the unions. The President has appointed Dr Kgosientso Ramokgopa as Head of Infrastructure and Investment in the Presidency to be responsible for developing a plan for infrastructure investment detailing the construction of new infrastructure and the maintenance of existing projects. The Minister told Members that the National Spatial Development Framework is still outstanding. Once adopted, this will guide DPWI on where to make investments, particularly to address the former apartheid spatial plan and to ensure that cities, towns and communities are well integrated and connected to work opportunities.
DPWI has been directed by Cabinet to pursue immediate term, medium-term and long-term projects for implementation. Cabinet asked DPWI to restructure the Expanded Public Works Programme (EPWP) to include training and capacitation across the industry. A plan detailing these tasks was done jointly with the economic cluster of ministers, this was then presented to the Cabinet Committee, following which it was approved by Cabinet. DPWI has been involved in extensive consultations with provincial premiers, mayors, South African Local Government Association (SALGA), Municipal Infrastructure Support Agency (MISA), National Economic Development and Labour Council (NEDLAC) and State-Owned Entities (SOEs).
DPWI has developed a new methodology to guide infrastructure implementation and ultimately increase transparency and accountability. This is crucial as the construction industry is currently the least transformed but most corrupt sector in the country.
Following SONA, a symposium was held in Cape Town with 300 participants from a range of commercial banks and international financial institutions. It has become clear that the fiscus alone will not be able to fund South Africa’s infrastructure investment programme, thus requiring collaboration with the private sector. Dr Ramokgopa will expand on this.
Minister de Lille said COVID-19 has exacerbated the country’s existing crisis and emphasised the need for targeted infrastructural investment as part of the country’s Economic Growth Strategy. DPWI will continue to consult with relevant stakeholders and engage with communities to promote buy in and job creation before proceeding with any infrastructure implementation.
On 23 June 2020, the Minister had attended the second Sustainable Infrastructure Development Symposium of South Africa (SIDSSA) convened by the President. This gathering brought together stakeholders who will partner in the investment and implementation of infrastructure. DPWI is working towards developing a skills database to bring on board unemployed and retired professionals to build the necessary capacity to execute the programme.
The Minister told MPs that is was not on purpose that DPWI had delayed appearing before them. Rather, this was due to the extensive consultation process the DPWI had embarked on in the last six months.
In 2018 Government made its first commitment towards the Infrastructure Fund which is now operational and based within the Development Bank of South Africa (DBSA). Spending of this fund will be guided by DPWI. It is crucial that Government takes the lead in infrastructure development for job creation.
Infrastructure Investment Plan: briefing by Head of Infrastructure & Investment in Presidency
Dr Kgosientso Ramokgopa, Head of Infrastructure and Investment in the Office of the President, reported that the Infrastructure Plan was conceptualised as part of the country’s plan to revitalize the economy and reduce rampant unemployment. The COVID-19 pandemic and the downgrading of the economy has only made the crisis worse and increased the urgent need for infrastructure investment.
The construction industry has experienced a 14.2% contraction, ultimately resulting in significant job losses. The National Development Plan (NDP) sets out objectives to be achieved by 2030 which includes the reduction of unemployment and elimination of inequality. The country is currently far from achieving its NDP target for public sector infrastructure due to underspending across all spheres of government and SOEs and overall reduced state implementation capacity.
Dr Ramokgopa reminded MPs that on 18 February 2020, President Ramaphosa had reasserted the integral role of infrastructure in the country’s economic recovery plan. Additionally, the majority of the priorities proclaimed during the President’s SONA speech are dependent on infrastructure development. The symposium was held to promote partnerships with the private sector in an effort to produce a credible pipeline of infrastructure projects.
• A new methodology known as the Sustainable Infrastructure Development System (SIDS) has been created to guide infrastructure development in the country
• As of April 2020, 177 projects have been submitted, these are divided into six sectors; Transport, Human Settlements, Water and Sanitation, Agriculture and Agro-processing, Energy and Digital Infrastructure
• 55 SIDS projects are post-feasibility meaning they are closer to implementation
• Projects have been selected according to their ability to promote job creation, broaden municipality revenue flow and resuscitate rural economies
• Total project investment is over R1.6 trillion, estimated gap funding required is R217 billion
• 1.6 million employment opportunities are projected.
Of the 55 Immediate-Term SIDS projects received in April 2020, 16 are located in Gauteng followed by KwaZulu-Natal which has submitted 12 and the Eastern Cape which has six. Provinces which have created project packaging capabilities have been able to submit good quality projects. However, the absence of project packaging capability should not hold provinces back from progressing, at the expense of citizens. DPWI is working collaboratively with provinces and has made consultations to improve the quality of project submissions. As of 30 June 2020, an additional 99 projects have been submitted and 33 are post-feasibility. This is an indication of growing confidence in the application of the SIDS methodology.
Historically, infrastructure development has been undertaken in a transactional manner. Cabinet has approved a new approach which examines the extent to which a project advances the strategic interests as expressed in the NDP, the priority sectors of the Sixth Administration and the National Spatial Development Framework. The methodology also interrogates the development impact of projects; job creation potential, infrastructure value chain, where materials are sourced and how to broaden the market. It looks at various public and private sector financing pathways such as blended funded, institutional implementation capacity and sustainability.
Seven mechanisms have been identified for immediate development and implementation to ensure the plan is expedited. It is crucial that all undertakings are based on a regulatory framework. This is particularly important in the immediate post COVID-19 period where companies may not have the money required if they win construction tenders. DPWI is interrogating this matter together with National Treasury.
Project Process Flow
Infrastructure now has a single point of entry through the Presidential Infrastructure Coordinating Commission (PICC) which holds technical expertise. The Budget Facility for Infrastructure (BFI) sits at the National Treasury and has financial engineering expertise. Together these fall under Infrastructure South Africa and ensure government is agile and has the necessary capacity.
National Infrastructure Plan 2045
This will identify priority sectors, skills required to deliver projects and the financing sources. The country’s fiscal headspace has diminished which requires government to pursue alternative funding. The plan will address the reforms necessary.
Dr Ramokgopa said the plan is quite ambitious and what had been presented was the first wave of projects. More projects will be taken to market for private sector funding in order to relieve the fiscus. This will allow more social infrastructure projects such as schools, provision of water and healthcare facilities to be funded through the fiscus. Those with potential returns will be funded through debt capital markets and the Infrastructure Fund. These actions are being taken in an effort to redesign infrastructure implementation and to transform the economy.
The Minister concluded by saying the foundation has been laid for transforming infrastructure which can play a broad role in South Africa’s economic recovery. DPWI will continue to engage regularly with the Committee. She will also give a progress report to Cabinet every three months and account to the Presidential Infrastructure Coordinating Commission (PICC) and Parliament. DPWI looks forward to receiving the inputs of the Committee.
Ms L Mjobo (ANC) asked about the geographical spread of projects allocated across the nine provinces. The presentation has listed some projects under National, what will national do in this case? She asked why Gauteng had been prioritised as number two on the list of provinces while Eastern Cape which is vastly rural was prioritised third. Why was public infrastructure not included in the sector allocation list?
Ms M Hicklin (DA) said the presentation was great on ideals but lacked details. She asked:
- How will severe underspending in the DPWI be addressed?
- How will funds be rolled out and monitored to ensure they are used appropriately?
- How will supply chain loopholes be addressed to ensure corruption and fund misallocations do not occur?
Ms S Graham (DA) said that slide 3 mentioned Infrastructure South Africa as the single point of entry for all infrastructure. DPWI had given away infrastructure to the Department of International Relations and Cooperation (DIRCO) and the South African National Defence Force (SANDF). Will DPWI get this back and be a central point for infrastructure? Is Infrastructure SA a new state-owned entity and what kind of organisation will it be? What does its governance structure look like? Who does the structure fall under?
She said the DPWI 2020 Annual Performance Plan had highlighted legislation as a major weakness of the DPWI. How will this be mitigated to ensure the legislative reforms required for the infrastructure plan are implemented?
Ms Graham said enforcement is one of the major challenges experienced by the Independent Development Trust (IDT) and Property Management Trading Entity (PMTE). How will this be addressed?
She said intergovernmental relations (IGR) plays an important role in DPWI as far as performance and spending are concerned but it does not always address IGR with client departments. The presentation notes a "universal urban management income grant". Is this new and what will it look like?
She asked for more detail on what the infrastructure value chain entails. With the closure of IDT, a lot of skills and capacity will be lost. Is there a strategy to attract skills to the DPWI in the short and long-term? Will the DPWI be growing its own timber in the future? Will the restructuring of EPWP allow the upskilling of participants instead of merely allowing people to earn a minimum wage?
She referenced slide 10 which speaks about enforcement at all cost, what does this mean? She asked who will cover the cost of materials which are not included in the cost for township roads. DPWI cannot impose unfunded mandates on municipalities that do not have the resources.
She expressed concern about the proposed temporary hospital in Tshwane which will create 350 jobs at a cost of R1.56 billion. How many beds will this hospital have and what is its foreseeable lifespan?
She asked who will be supported by the National Upgrading Support Programme. How will this be funded and is it wanted?
On the 500 000 solar water geysers, she asked where these will be implemented. It is important to test the quality of the water in the location prior to installing because geysers had failed in a particular municipality due to poor water quality. In some cases, it might be wiser to install 500 000 water tanks instead because water scarcity is a bigger challenge than heating.
She asked who is part of the Infrastructure Investment Committee and under which department will it fall. Who will be responsible for this body?
She said the Infrastructure Development Act 23 of 2014 makes provision for a Steering Committee for each Strategic Integrated Project (SIP). Who will be part of the Steering Committee? What will their role be and will they be specialist? She expressed concern that an additional layer of bureaucracy is being created and will ultimately slow down progress rather than facilitate infrastructure development. Additionally, the presentation had failed to mention any maintenance plans which was worrying. She asked what plans, if any, had been made to ensure the maintenance of infrastructure and how would this be funded.
Ms A Siwisa (EFF) said, having heard the presentation, it is unclear what exactly the DPWI mandate is as far as infrastructure is concerned. The Minister had reported that the construction industry is the most corrupt sector; how will the DPWI deal with this in the future?
She asked what the role of Agrément South Africa would be. With the closure of IDT and PMTE facing similar challenges, who will be responsible for infrastructure?
As the DPWI looks towards blended financing with the private sector, what will be the role of investors in appointing contractors and deciding the location of projects. There is a tendency for investors to demand projects to be implemented in certain areas as a requirement for funding.
She asked why the presentation had not included industrialization as this is necessary for South Africa to be able to improve local manufacturing. Will this sector be assisted?
Given the current IDT crisis, she expected a specific timeline detailing what will happen with projects that have already been committed for the financial year.
She said the presentation had failed to account for projects under the Health sector which were urgent for rural communities. What infrastructure will be provided to ensure that communities have access to hospitals or clinics within their vicinity?
Ms S Van Schalkwyk (ANC) said she was encouraged that the Ministry is prioritising the transformation agenda and addressing apartheid spatial planning. The immediate projects highlighted in the presentation indicate a commitment towards advancing the lives of the poor. She applauded DPWI for the projected 1.6 million job opportunities it expects to create; this is crucial given the current economic climate.
Ms S Van Schalkwyk (ANC) asked for a progress report on the Infrastructure Development Act of 2014.
She raised concern about the oversight role to be played by the Committee as this was not very clear. How will the Committee be able do oversight once funds have been disbursed to municipalities and provinces? The Committee and DPWI need to ensure that they do not create an environment which encourages corruption and maladministration to thrive.
She asked what impact COVID-19 has had on infrastructure implementation.
As of 31 March 2019, the DWPI had land parcels to the value of R127 billion. What is the current value and condition of these assets and what are the maintenance plans?
Mr M Tshwaku (EFF) asked the Minister to outline the role of DPWI given the fact that departments such as the Department of Health (DoH) and Department of Defence (DoD) were doing their own infrastructural work which is not within their mandates. He agreed with other Members that additional entities were being enlisted to achieve the DPWI infrastructure mandate which left the Committee confused on its oversight role. He believes the severe underspending is a result of a failure to properly realign responsibilities with projects.
He said government should consider establishing a state-owned construction company that will have the necessary specialised skills and technical know-how. This will cut down on costs and protect the state from the corruption found in the private sector. He referred to Medupi as a prime example of how private companies abuse variation orders to make money from the state.
He asked for more details on the pipeline projects, specifically, where projects would be located, expected timelines, who would be benefitting and who owns the construction companies. It was very clear that mostly white owned companies have benefitted from the country’s infrastructure development projects.
He recommended introducing a minimum wage to the EPWP instead of stipends which are insufficient. This is important because black people tend to be exploited by construction companies.
He asked why DPWI was not looking into rural infrastructure development particularly schools and hospitals. He agreed that Eastern Cape should be prioritised.
He agreed with Ms Graham that making changes to legislation will take a long time. He asked for clarity on what the DPWI’s role is if projects are categorised at the national, provincial and municipal level.
Mr M Nxumalo (IFP) said he had been scheduled to engage in another meeting which had been cancelled. He had missed the DPWI briefing and therefore would not be able to provide substantive inputs.
Mr W Thring (ACDP) said due to the COVID-19 pandemic, the country has reportedly seen an increase in unemployment rates potentially surpassing 40%. Figures for Quarter 2 will likely be more devastating and he agreed that infrastructure and development will be key to economic growth.
He asked DPWI to give more definitive details of the projects such as start and end dates and the contractors involved. These are the details needed by Committee and not just broad outlines of what DPWI intends to do. Members will need regular updates on the status of projects. Given the legacy of looting taxpayer funds in SOEs, it is crucial to provide key economic guidelines on the determination and management of funding for infrastructure projects. It is important for the Committee to have input on such financial management.
Role of DPWI
Minister de Lille replied that on 30 May 2014 the President had assented to the Infrastructure Development Act 23 of 2014 which clearly defines how infrastructure should be dealt with. The reconfiguration of government was done in accordance with the law and gazetted by President Ramaphosa in 2019. This gazette transferred the PICC and the Infrastructure Delivery Management System (IDMS) to DPWI. The Infrastructure Investment Plan presented is lawful and aligned with the Infrastructure Development Act. The plan is the role of DPWI as enacted as infrastructure is now part of the DPWI mandate. She proposed that DPWI and the Committee should workshop the Act to ensure that everyone is on the same page.
The Minister said the budget for DPWI which has been approved by Parliament accounts for infrastructure project management within DPWI. The DPWI is not taking away the role of local government. In accordance with the Infrastructure Development Act, the role of DPWI is to provide for planning, facilitation approval and implementation of public service infrastructure which is of economic and social importance for the country. The DPWI is also responsible for the management of projects during all lifecycle stages. Section 8(3)b states that it does not derogate from provinces implementing any infrastructure project that falls outside of the Strategic Integrated Projects. Any arising disputes must be resolved in terms of the Intergovernmental Relations (IGR) Framework Act.
Committee’s oversight role
The Minister explained that only Parliament could decide how the Committee performs its oversight as the three arms of government have clearly defined roles. She cannot tell the Committee how to do its oversight. However, she is accountable to the PICC, Cabinet and Parliament. She will report to the Committee as often as Members require as she is already required to appear before Cabinet on a quarterly basis. She thanked the Committee for its inputs and advice.
Minister de Lille referred to Section 4 of the Infrastructure Development Act which provides detail on the PICC implementing structures. The PICC has a Council; a Management Committee; a Secretariat; and a Chairperson, coordinator and steering committee for each SIP. The Council members are the President as Chairperson; Deputy President; Ministers designated by the President; the Premiers; and Executive Mayors of metros and South African Local Government Association chairperson representing municipalities. DPWI cannot operate outside of the conditions enshrined by the Act. DPWI has to account to the PICC in the same manner it has to account to Parliament.
Infrastructure South Africa (ISA)
ISA would be housed within DPWI to serve the purpose of being a single-entry point. The reason for this is ensure that DPWI has a system accounting for all infrastructure projects at all levels of government. DPWI will not be taking away any function of provinces or municipalities. ISA is simply the administrative arm that will assist in the application of the new methodology. DPWI has been in consultation with SALGA and municipalities on this matter.
The replacement of infrastructure always comes at a higher cost than repair and maintenance, therefore, this has been included within DPWI’s plan.
Agrément South Africa
The Minister clarified that Agrément SA is an entity under DPWI. The company had recently presented its Annual Performance Plan (APP) and Strategic Plan to the Committee which clearly defined its role.
The Minister said the construction sector was indeed the most corrupt. Taxpayer funds are wasted in this industry when projects are not completed on time. DPWI has now put systems in place to detect and prevent corruption. Additionally, DPWI has already reported on how it has implemented consequence management where maladministration has occurred.
Head of Infrastructure and Investment response
Dr Ramokgopa clarified that the purpose of the geographical spread slide is to demonstrate the number of projects physically located within the provincial boundaries. Where the presentation refers to national projects, this means that the project has a national footprint present throughout all provinces.
On the Eastern Cape projects, the geographical spread provides information on the number of projects initially submitted by provinces in April 2020 through to June 2020 and is not a reflection of prioritisation. In his presentation he had indicated that some provinces had submitted significantly more projects than others. This was predicated on their capacity to submit quality proposals and was not an indication of the infrastructural need within the province. DPWI has embarked on a task of helping provinces improve the quality of submissions to ensure they have a significant share of total project funding.
Universal urban management income grant
Dr Ramokgopa clarified to MPs that there no project called the universal income grant, however, there is a comprehensive urban management programme which will assign approximately 52 000 recruits across the country to perform basic urban management tasks such as cleaning the streets and unblocking drains. This programme is being designed together with municipalities to create job opportunities.
Another project that will be implemented is the digitization of government information, such as public health data. This project aims to provide a central location for hospital records ensuring that information is consolidated and easily accessible across all spheres of government. The project will employ approximately 10 000 youth and is an example of the kind of projects which have a national footprint.
Infrastructure value chain
Dr Ramokgopa explained that prior to implementation, infrastructure projects go through stages: conceptualization, design, packaging to demonstrate income streams, presentation before markets to secure funding. Following which, the project is delivered and a maintenance plan is designed.
He stated again that maintenance has not been neglected because it is crucial when trying to elongate the lifespan of assets. The entire infrastructure value chain of projects will be managed through ISA. By performing maintenance, not only is the lifespan of a project lengthened, but annuity and employment are provided to municipalities and citizens.
Skills in built programme
Dr Ramokgopa responded that the Ministry has been prioritising attracting skills into the infrastructure industry and has been vocal about its intention to do so in all road shows and engagements the Minister has attended. DPWI is working on developing a database of all unemployed people within the built environment space. The Engineering Council has committed to work with other professional bodies to provide DPWI with all the information it requires to provide a sense of the current skill base in the country.
DPWI worked with the National DoH to address the need for more hospital facilities going into the future. Together they identified the Tshwane Showground as an asset that could be used. Engineers did a preliminary study and concluded that 1500 beds could be yielded. The cost provided includes high care facilities. Following a conversation between the Minister, Director-General and Gauteng DoH, it was decided that plans would be finalised together with the province to determine how it would manage the Covid-19 surge in demand for beds. High care will be provided for in pre-existing hospitals. The field hospital is designed to cater only for overflow and as an isolation site. The construction is projected to take about eight weeks and the primary objective in this case is not job creation but building additional bed capacity to manage the surge when it comes.
The solar geyser programme included in the presentation is not the same as the low pressure programme targeting low income households. This is a collaboration with the private sector and insurance companies providing high pressure solar water heaters to manage demand side. Insurance companies reportedly replace 500 000 geysers per annum. The programme aims to promote the local production of geyser components which will contribute towards industrialization. It will also allow the transfer of skills for installation and post install management. The private sector is expected to contribute 70% of the funding and the public sector 30%. This will be an opportunity for government to reduce emissions and free some pressure on Eskom’s power grid.
International best practice advises that 8% of any infrastructure project budget be allocated towards maintenance. Currently, South Africa does not have this practice. However, National Treasury has imposed that this becomes the norm to provide the discipline required to maintain public sector assets.
When projects are presented to the market, DPWI will impose the requirement that materials are locally produced where possible. By imposing localization, materials are manufactured within the country which is essentially what industrialisation is. Job creation is mostly unlocked in value addition and not primary material extraction.
Dr Ramokgopa replied that he already had provided a three-month timeline for the initial 55 projects which were post-feasibility and had been approved by Cabinet. In the future, DPWI will return to the Committee to provide updates on the status of projects.
Social infrastructure projects
The targeted six sectors were identified because of their ability to create a revenue stream. The initial intention of the plan was to implement projects that will provide enough returns to attract private sector investments. By using alternative financing pathways like the debt capital market and blended finance, DPWI is able to relieve the fiscus which will then be able to allocate more funds towards social infrastructure.
Part of the work needing to be done is the development of plans for social infrastructure projects like hospitals in preparation for the National Health Insurance (NHI). The field hospitals being constructed during the COVID-19 period are merely intended to address any surge in bed capacity. NDoH has approached DPWI to assist in creating plans for the construction of hospitals nationwide. These will be funded through the fiscus and a methodology referred to as “build, operate and transfer” where the private sector will fund a project, operate for a decided period of tenure and then release the asset to the public sector. These are the kind of new funding instruments the Minister and Deputy Minister are exploring.
Although the Minister is mandated to perform oversight and report to Cabinet on the progress of the 55 SIDS projects, approximately 90% of these projects are not by DPWI. The majority of the projects will be procured and implemented by Transnet, South African National Roads Agency (SANRAL) and the Water Boards. The Minister will require a certain level of localisation, employment opportunity for black people and women and transformation. These are examples of the kind of factors that implementing agencies will have to report on.
State-owned construction company
Dr Ramokgopa agreed that Mr Tshwaku had raised a valid point in making a case for a state-owned construction company. There is currently a discussion with the Development Bank of Southern Africa (DBSA) and Coega which have a degree of capacity. Developing a national construction company would certainly ensure that projects are delivered cheaper and more quickly. He emphasised that the discussion was still at a nascent stage and was not policy. This will be led by the Minister.
Ms Siwisa asked if the was a closing date for provinces to submit projects. What is the role of DPWI when it comes to allocation of projects across provinces? If projects are allocated on condition that provinces submit plans, rural communities such as those in the Eastern Cape and Limpopo will be left behind. She asked what intergovernmental relations (IGR) was currently doing to communicate with the provinces about this.
She said that Agrément SA is responsible for coming up with innovative and environmentally sustainable construction solutions. She brought up industrialisation based on the function of Agrément SA which approves local production materials. With the possibility of a state-owned construction company, the country will decrease corruption. The role of Agrément and the promotion of industrialisation are inextricably linked.
She clarified that when she had asked for the timeline of projects in the National Infrastructure Plan 2045, she wanted a breakdown of all activities that would happen within the three-year period and not just projects proposed for the next three months. The DPWI needs to breakdown the short-term milestones it wants to achieve towards its long-term goals.
She said it was reckless for Dr Ramokgopa not to focus on employment creation for certain projects. People have the expectation that any project implemented will bring job opportunities.
On the solar water geysers, she said it was not fair to target high income households as opposed to low income households which have a demonstrated need. Why can DPWI not move towards installing water tanks – instead of providing solar systems for high income households.
Mr Thring said South Africa is more developed when compared to its regional counterparts. This presents challenges for the country when business moves beyond its borders and progress is slowed down due to bottlenecks created by the limited capacity of SADC partners. He asked what the discussions are around regional infrastructure development.
He raised concern that it was unclear who would be responsible for reporting on the completion of projects. IDT provides a clear example of what happens when it is not clear who is responsible for reporting on the completion of projects. Services are rendered without payments being made by clients. It appears as if the Committee will remain responsible for allocating funds. However, it appears that project reporting will now be directed towards the PICC. The Committee needs to interrogate the Infrastructure Development Act of 2014 as soon as possible.
He said while he served in the eThekwini municipality, the ACDP facilitated the installation of rainwater harvesting facilities in low income human settlements.
Mr Tshwaku encouraged the Minister to continue looking into establishing a national construction company. He said international experience has shown that this is a possible intervention that can reap positive results and root out corruption if undertaken.
He raised concern that there was no focus on social infrastructure. It was incorrect for Dr Ramokgopa to suggest that hospitals are not an immediate need while the healthcare system has collapsed. Dr Ramokgopa should be embarrassed that he had spent R1.1 billion on a temporary hospital instead of refurbishing an existing structure. As a developing country South Africa still needs to invest in social infrastructure as it is lagging behind. He criticised Dr Ramokgopa for not providing more detail on what investments would be made to eradicate mud schools and provide water to communities.
He said the EFF manifesto specifically provides information on areas that need infrastructure; this can be shared with the Minister and Committee members.
Ms Graham said she was unaware Members could expound on party manifestos in the meeting. Her question on the Infrastructure Investment Committee had not been answered. Is this a new structure that will be formulated around ISA? Who will sit on Investment Committee and under which department will it fall? Again, she asked if ISA is an SOE and what structure it will take. Will it be the similar to the IDT, if so, why is DPWI closing down one SOE in favour of constructing another. Again, she asked what DPWI means when it says it will do enforcement at all costs.
The Chairperson said the DPWI budget had allocated R60.8 million to Programme 4 for infrastructure development coordination. She asked if this referred to the administrative task of the PICC. The President had launched the District Development Model (DDM) in 2019. She asked when DPWI would be getting a legal framework to assist infrastructure development as it relates to the DDM.
She thanked the Minister for her suggestion to workshop the Infrastructure Development Act. However, the Committee will do this independently.
Head of Infrastructure and Investment response
Prioritisation of employment
Dr Ramokgopa asked MPs not to distort the presentation. He had clearly stated that approximately 769 540 jobs would be created by the 55 SIDS immediate-term projects and programmes. Therefore, the claim that job creation has not been prioritised is false and ultimately a distortion. He had already explained the rationale of the projects, which is to stimulate aggregate demand (develop infrastructure projects) and to resuscitate the supply side which is industry and built environment. Stimulating the construction industry will subsequently bolster employment. Job creation is ultimately at the centre of the infrastructure plan. The suggestion that it was not a priority could not be derived from the presentation.
The primary motivation for the construction of field hospitals is to increase bed capacity in anticipation of a surge in demand due to COVID-19. Field hospitals are in addition to the conventional hospitals which will have insufficient bed capacity; this is a temporary measure implemented to mitigate this challenge. Therefore, the primary emphasis is not job creation but the provision of as many beds in the shortest possible time.
He explained that the preliminary design of the field hospital was to create 1 500 beds, of which 25% would be allocated for high care. Following a discussion between Minister de Lille and Premier David Makhura of Gauteng Province, it was decided that the provision for high care would be placed in existing conventional hospitals to ensure future use as the country prepares for the NHI. The cost of the project is now expected to decrease significantly and the field hospital would no longer cost R1 billion as high care has been removed from the plan.
Solar Water geysers
There is a clear distinction between low pressure and high pressure solar geysers and the projects were completely different. Provision of low pressure solar geysers for low income households is still continuing under the Department of Mineral Resources and Energy (DMRE). What DPWI’s plan intends to do is to collaborate with the private sector to create a solution for the high turnover of conventional geysers. This will result in less reliance on Eskom’s electrical grid and it will provide employment opportunities at two levels: manufacturing and installation and maintenance. A requirement will be set for input components to be produced locally and young people from municipalities will be trained and certified to install the geysers and perform routine maintenance which guarantees long-term employment opportunities.
The point of the Infrastructure Investment Plan was to create a pipeline of projects which could be funded through the private sector. By pursuing alternative financing means for these projects, DWPI will be able to relieve the fiscus and will have more money to invest towards social infrastructure projects like water reticulation, the eradication of mud schools and construction of hospitals and clinics. At no point in his presentation had he said hospitals were not crucial. The COVID-19 pandemic had exposed the country’s shortage in hospital bed capacity and the need to provide social housing and potable water. The suggestion that he had said hospital infrastructure was not an immediate need is false.
Infrastructure Investment Committee
The intention is to make ISA a single point of entry for infrastructure projects. Three different financing methods will be used: debt capital markets / commercial funding; blended financing; fiscus. The Infrastructure Investment Committee is tasked with deciding which financing method is most appropriate for each particular infrastructure project. It is chaired by the Minister who is the executive authority. She will account to Cabinet through regular reports.
The Minister replied that DPWI does not allocate projects to provinces. DPWI met with Premiers who elaborated on their own infrastructure development plans, these will be put on a national database. DPWI will then assist provinces to ensure that projects are feasible and to secure the necessary funding.
In accordance with the Intergovernmental Relations Framework Act 13 of 2005, the Act facilitates meetings between the three spheres of government. This includes the Minister and Members of Executive Councils (MINMEC) meeting and consultations with provincial governments.
The Minster agreed that the entity has developed many innovative ideas which DPWI looks forward to marketing and including in its infrastructure development plan.
DWPI has aligned the first phase of its infrastructure plan with the NDP, the African Union 2063 plan as well as the SONA commitments made by the President. The plan has connected infrastructure development on a continental level. DBSA and the Directors of Infrastructure in the African Union have been part of discussions to ensure that infrastructure development goes beyond the country’s borders.
The Minister agreed that Mr Thring’s suggestion to promote water harvesting is a good idea. The impact of climate change calls for the country to respond on how to preserve water, stop leaks and harvest rainwater. Water harvesting is potentially a condition that municipalities could require as part of infrastructure development.
State-owned construction company
DPWI is committed to opening up the discussion on new approaches to infrastructure. She is open to sharing Mr Tshwaku’s recommendation for a state-owned construction company.
Investment SA (ISA)
ISA will be within DPWI. DPWI is currently consulting with the Department of Public Service and Administration (DPSA) on how best to form the structure. This work is ongoing.
The Minister explained that the three spheres of government are not always in communication especially on the implementation of infrastructure. When DPWI says it wants “enforcement at all costs” it is referring to its commitment to working better and closer with provinces to address this poor consultation challenge.
As presented, DPWI has screened the 177 projects, of which 55 are post feasibility. The next step is to prioritise commercial infrastructure plans which can be collaboratively financed through the private and public sector. Those suitable for blended financing will be sent to the Infrastructure Fund. DPWI will also prioritise social infrastructure that requires funding from the fiscus. It will approach National Treasury for this.
National Infrastructure Plan 2045
The Minister said the point of including plans in three-year, five-year and ten-year intervals is to illustrate the consistency with planning and maintenance in the short term and to demonstrate a level of confidence to the private sector. Infrastructure is a long term process. She confirmed that the PICC is currently working on a brief as to how the 25 year plan will be implemented.
Programme 4 budget
The R60.8 million budget allocated under Programme 4 is intended for the PICC task team which was transferred by the President to DPWI.
District Development Model
She agreed with the Chairperson that the projects must be overlaid in the 46 districts and across all eight metros. DPWI will have to consult with the district municipalities and do social facilitation to ensure that receiving communities are aware of and involved in DPWI’s long-term infrastructure plans. The Committee could get involved in this process. It is important to ensure that projects reach the district level. Ministers will soon be assigned to ensure that the district model is being applied.
The Minister thanked the Committee for engaging with DPWI and invited MPs to submit any further questions in writing.
The Chairperson said it is clear that the economy is ailing and that infrastructure will be crucial to its revival.
She thanked DPWI and Dr Ramokgopa for taking the Committee into confidence on its plans. She said the transfer of the PICC to DPWI means that the Committee now has the responsibility of doing oversight on its functions. She asked the Minister to ensure that members receive regular reports from the PICC as it was not good for the Committee to see issues presented in the media prior to being engaged with.
The Chairperson said the Committee will be doing oversight in July and would communicate which projects will be targeted, including the Beitbridge border. The week of 28 July-7 August has been set aside for committees or oversight and the Committee has elected to perform oversight. The Portfolio Committees on Home Affairs, Defence and the Standing Committee on Public Accounts (SCOPA) have taken the same resolution to visit the Beitbridge border. Logistics are being discussed on how to facilitate joint oversight.
Ideally, the Committee would like to dedicate the first two days for Beitbridge and the rest of the week to visit quarantine sites as well as the infrastructure projects discussed with DPWI.
The Committee Content Advisor, Mr Shuaib Denyssen, said the Committee needs to workshop the Infrastructure Development Act and visualize the structures it details to understand it well. He has had certain misgivings since the PICC was transferred to DPWI. He raised concern that R60.8 million has been allocated for PICC coordination and that this did not include any projects. The Development Bank of Southern Africa (DBSA) is also involved in the process which the Committee currently has no oversight over. The Committee is now tasked to do oversight on projects across all spheres of government. This needs to be recognised by Parliament and the Committee must be given preference when oversight is done.
Much has occurred as far as social infrastructure development is concerned. DPWI has been given the functional mandate for social infrastructure while IDT is being dissolved whereas IDT plays one of the most significant purposes of social facilitation across the country. The dissolution of IDT leaves DPWI without the budget or legal mandate to oversee such projects. The Minister had clearly stated twice that she gets overseen by the PICC. Therefore, the Committee does not do oversight over her.
Parliament's Chair of Chairs needs to understand that both the Select and Portfolio Committees need to be given the proper mandate given the functional change of DPWI. It needs to be able to do oversight together with every other committee in a similar manner to SCOPA which has been given a broader mandate. He recommended that the Chairperson and the whip of the ruling party must be involved in this matter.
The Chairperson thanked the Committee Secretariat and Mr Denyssen for their contributions. She asked that they set a day for Members to workshop the Infrastructure Development Act. She thanked MPs for their engagement and encouraged them to continue taking all necessary measures against the COVID-19 pandemic as it is a real threat. The meeting was declared adjourned.
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