Update on DBSA & SA National Parks facilities projects; with Deputy Minister

Meeting report

SANPARKS on infrastructure and maintenance programmes

Mr Fish Mahlalela, Deputy Minister of Tourism, said his Department had been doing maintenance projects with SANPARKS, including work on the 19 national parks, as part of the Presidential projects. He added that the Development Bank of Southern Africa (DBSA) projects were community-oriented. The majority of the projects were happening in Limpopo and the Eastern Cape, with very few in the other provinces.

Mr Property Mokoena, Managing Executive: Parks Division, SANParks, briefed the Committee on infrastructure-related projects and the maintenance programme. Members were taken through these projects, page by page. The focus was on progress, budget allocation and expenditure, and the number of jobs created. These were their six infrastructure projects:

• Shangoni Gate Development
• Phalaborwa Activity Hub
• Dinosaur Interpretive Centre
• Addo Main Rest Camp Extension
• Mapungubwe Youth Facilities
• Agulhas Lighthouse Precinct Development

DBSA on infrastructure projects

Mr Chuene Ramphele, Group Executive: Infrastructure, Development and Delivery, DBSA, said the DBSA was implementing 70 projects, of which three were only up to design development stage. 67 projects were to be completed after the construction and close-out phase. Since 13 June 2023, there have been 47 active projects, and currently, there are 56 active projects. The target for the 2023/24 financial year was to deliver 47 projects. Of the 56 projects, 31 had achieved practical completion, and 25 were in construction.

Mr Thulani Nxumalo, Programme Manager for the National Department of Tourism (NDT) programme, reported that there were conditions that led to projects not meeting their practical completion dates. These had included extensions of time for the following reasons:

• Inclement weather;
• Work stoppages due to community or labour disputes;
• Conditions associated with access to sites; and
• Additional work required on the facilities.

Other conditions included contractors that had failed to meet their agreed obligations regarding the completion of work. The recourse for a delay, as per the contract, was levying penalties against poor performing contractors, and poor performance of contractors that had been put on terms or default, and failing to remedy their performance, leading to termination of the contract.

Concerning challenges, he said conditions of the facilities were often found to be more severe or dilapidated, and required for a longer design period than was originally anticipated. In some remote areas, accessing sites and delivering material was difficult due to extreme weather conditions, especially in areas like the Eastern Cape, Limpopo and KwaZulu-Natal. This required double handling of material, and caused delays in excavations and earthworks for buildings and services. Community protests and unrest resulted in delayed implementation of projects. The acceptance of the project steering committees by stakeholders in the communities was problematic, and this also caused delays.

It was also found that many contractors were experiencing financial constraints after site establishment. This required additional monitoring and the provision of assistance to these contractors to implement contracts. As a result, the DBSA offered a loan facility to those struggling with financial resources.

Lastly, of the 56 projects in construction, four projects had a contract value larger than R30m. These included Matsila Lodge (Limpopo), Qatywa Eco Tourism Development, Mthontsi Lodge (Eastern Cape), and Nandoni Dam. Any project above R30m, according to the DBSA standard practice and supply chain management (SCM) policy, should include allocation of 30% of the construction value to local small, medium and micro enterprises (SMMEs). Projects below R30m for construction have been encouraged to allocate a maximum amount to the local SMMEs to create jobs in the communities and to buy material from local suppliers.

(Tables were shown to illustrate budget allocations and expenditure, programme status, and details per project in construction)

Discussion

SANPARKS

Deputy Minister Mahlalela remarked that the maintenance programme had had a huge impact and changed the lives of many people in the communities in the Kruger National Park. Most SMMEs also benefited, and their skill levels had improved to the extent that they now had the chance to work anywhere.

The Chairperson indicated that she was impressed with work done by SANParks because its presentation indicated an entity that knew the meaning of the expanded public works programme (EWPW). In many instances, the EPWP allocation had been misdirected to what it was not meant for. It had been meant to benefit people, create permanent jobs, and focus on developing skills. SANPARKS had managed to provide training and jobs to unemployed people in the country. Its presentation showed the number of people and SMMEs that had benefited from these projects, and it was hoped that they had contributed to the economic development of those areas, because SMMEs were supposed to push for economic development in their areas.

Ms H Ismail (DA) sought clarity on the meaning of "repetitions for certain infrastructure." She also asked for the entity's input on the vultures killed in Kruger National Park (KNP), as that would have a negative impact on the natural ecosystem.

Mr Mokoena said “repetition for infrastructure” meant the infrastructure was existing, and one would keep doing the same thing to maintain and preserve it. This could be fencing, refurbishing roads and buildings, etc. He also responded they had had challenges with the vultures. Because of illegal activities taking place, animals could be poisoned. Vultures were eating dead carcasses, and it was possible they could have been eating dead poisoned animals outside the park, and had then come to die inside the park, because they could not be fenced like other animals.

Mr H April (ANC) commented that taxpayers' money should be used better to develop the country and create the kind of destination tourism people would like to see. He was pleased with the report on the maintenance work and making people economically active. He asked about the number of skills that had been developed so that people could look after themselves in future. He wanted to know why budget expenditure and the completion of projects were going well in the Western Cape compared to other provinces; sought clarity on why R120m created 1 000 jobs compared to only 84 jobs created with R130m; and asked if the entity was aware of Sci-Bono, a world-class science centre that supports maths, science and technology education, where engineers had created many jobs.

Mr Mokoena said they had created skills ranging from fencing, building, thatching, etc, and some of these skills were specialised. The maintenance programmes were national. On the Western Cape matter, he explained the programme had been implemented across all national parks, and work was completed at the same time at all of them. The maintenance programme did not happen only in the Western Cape. It was only the Northern Cape and North West that did not have a maintenance programme.

Responding to the 1 000 jobs vs 84 jobs question, he said some projects were EPWP-related, while others were for maintenance, so the budget could not be the same. They procured locally for all the projects so that skills development could happen in a particular area rather than bringing in an external service provider. He said they had taken note of the Sci-Bono project.

Mr April emphasised he was aware the skills involved were different, but he was still concerned the two projects had the same budget, but the number of jobs created was different.

DBSA

Ms Ismail asked what labour disputes the DBSA was talking, about because it cited work stoppages due to community activities. How many contractors had been red-flagged? How much money had been given to contractors that had stopped projects? She wanted to know what the cost implications for the budget would be because of the shifting of completion dates; asked for an update on the DBSA memorandum of agreement (MOA) with the Department; and wanted to find out if the Department had established internal capacity for infrastructure projects.

Mr Ramphele said more emphasis was being put on the sub-contractors. In many cases, the main contractor failed to pay the sub-contractors, which would cause a dispute and lead to work stoppages. Rates were always discussed upfront. He said they had red-flagged contractors who were not doing their work. They were given default letters. In some cases, money had been recovered. He noted they needed to go beyond just red-flagging. The DBSA did not terminate the contractor first, but would try to assist it so that it could continue with the project. However, if there was no improvement in its work, the DBSA would terminate the contractor.

On shifting timelines, he said there was no extension without costs. Most extensions they were dealing with had associated costs. Concerning internal capacity, he said the project managers of the Department were shadowing and working together with their DBSA counterparts so that they learnt in the process.

Mr Victor Tharage, Director-General, Department of Tourism, said that building internal capacity had been a challenge to the Department, but they have been adopting a layman type of approach, visiting the sites and reporting about progress seen.

Mr April commented that the capacity of the DBSA was skewed. Work stoppages were a result of communities being undermined -- that was where the problem started. He said the DBSA had been a good "excuser," blaming the weather for not delivering projects. This meant due diligence was not being done. He also pointed out that consequence management was lacking. He asked how the money spent on failed contractors was going to be recouped, because if 15 projects had been implemented, many families would have benefited. He sought clarity on the ballooning budget, and wondered if this had been done because the term of the parliamentarians was coming to an end. He asserted that the DBSA was not assisting the Committee in ensuring services were delivered to the communities.

Mr Ramphele said due diligence had always been done when appointing a contractor. Cross-subsidisation has been the cause of most problems because contractors are appointed by many departments but fail to deliver on projects. Regarding consequence management, he said default letters were fine, but the DBSA needed to be in a position to terminate and get another contractor more quickly.

He said the ballooning budget was caused by projects that were now in construction, because during the Covid-19 restrictions, there was no work done, or no projects were under construction. Much expenditure happened when construction was taking place.

Regarding localisation, he said materials that should be bought locally were always indicated during the tender process. They needed to strengthen that part of local content, and tighten monitoring.

Ms Swazi Maja, Head: Infrastructure Delivery Division (IDD) Monitoring and Oversight, DBSA, added that construction had various stages. As projects moved towards construction, more money was being used, but it was within the budget. The contract value remained the same. It was a positive indicator the project was progressing. Costs usually escalated when one moved from planning to construction or implementation. There were cases where there would be a request for additional funds, if things escalated. The matter would be discussed and extra funding would be allocated.

The Chairperson enquired about the kind of contract management structures the DBSA had because there were concerns about contractors running out of funds and projects being delayed. He asked for an explanation of the meaning of inclement weather conditions that were causing the delay of projects; commented that the performance of the DBSA on projects it was supposed to complete was positive; wanted to understand what the responsibility of the DBSA was in relation to the role of community liaison officers (CLOs), so that people could be involved and protect the projects; enquired why struggling contractors were appointed in the first place; said she appreciated what the DBSA had done, but noted the challenges were dire; asked what the DBSA was spending on the EPWP programme; and if there were MOUs that would be extended or renewed.

Mr Ramphele explained that it became difficult to access sites when the weather was bad. They had been able to recover lost days, but they needed to plan better.

Pertaining to contract management, he said the idea behind the loan facility was to assist contractors with working capital to complete projects. The money was not deposited into the bank account of the contractor. After appointing a contractor, a project manager was appointed to work with the contractor and a project steering committee was established as well.

He said the DBSA had social facilitators to deal with community-related problems. There had been a challenge when it came to CLOs because, in some cases, people of a certain municipal ward did not want a CLO that came from another ward, but would prefer one that came from their own ward, even if the wards were just divided by a road.

He said when a contractor had been terminated, the DBSA would look at the gravity of the situation and sometimes discuss the matter with National Treasury.

On MOUs, he said the one they had with the Department would end at the end of March 2025. If there were incomplete projects, they would be discussed with the Department.

Mr April said he was worried of cross-subsidisation, and insisted that due diligence should be done properly to avoid a recurrence of situations. He asked how many contractors had been removed, and how many would be appointed, and what the impact had been on the costs/budget. Referring to people changing addresses when bidding, he suggested the DBSA should use Google maps to see where the contractors were, and indicated it was possible for a company to have offices in all nine provinces. There was no problem if it could deliver, even if it had offices in all provinces, because the Department was national. The problem was when a company could not deliver. He further advised the Department to have a formal internal structure for monitoring the projects by using available technologies, and to consider the safety aspects as well.

Ms Ismail asked if the DBSA had a list of contractors in each province because communities had been complaining that the main contractors were coming from other provinces. She enquired if there were contractors that had been red-flagged, and asked for the list to be given to the Committee. Could it be given a list of projects that had received additional funding? She remarked it was not acceptable, for example, to state that 99% of the budget had been spent, but projects had not been completed.

Mr Ramphele said lists of all projects and contractors that had defaulted would be sent to the Committee. There was a national contractor database, and it had its own challenges. There were two regimes of procurement -- a closed-tender system and an open-tender system. They had now started a process of running a database for a province, but it had been seen that the contractors had multiple addresses in all the provinces. They would now start to source from a contractor who had no multiple addresses in provinces. The database would be provincialised.

On the matter of outputs, he said that for this financial year, they were looking at R330m spending on the projects based on the cash flow and what the contractors would be spending.

The Chairperson noted 31 out of 47 projects completed by the DBSA, but indicated that there should be consequence management where there were delays. The Committee encouraged the use of the EPWP allocation to benefit the people of this country, and this should be reported in the reports of the DBSA, because tourism was expected to contribute to employment. The Committee wanted to see the stimulus projects prioritised and due diligence done before appointing contractors. Also, the 30% beneficiation or work to be given to the community should be explained thoroughly to the communities, and they should be assured that the projects were for them and would be handed over to them on completion.

Lastly, the Committee noted progress on the maintenance infrastructure projects, and advised that the contract management structure should be strictly adhered to. It also proposed that the DBSA should evaluate if the loan facility was still a viable option.

The meeting was adjourned.