The Civil Engineering Contractor January 2019 | Page 41

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work with the information at hand,
which thus far is still not concrete.
Fundamentally, we need an economic
growth catalyst to sustainably grow
the sector and provide much-needed
infrastructure. Our assumption, even
with the proposed stimulus, is that
the economy will continue to muddle
along until there is greater policy
certainty, and until the country’s
finances recover sufficiently to begin
investing in growth-enhancing and job-
creating infrastructure,” says Muscat.
The dearth of work in 2018
wreaked havoc on South Africa’s large
construction companies: eight years
ago, Aveng, Group 5, and Basil Read
were worth R31-billion. Today, they
are valued at around R350-million
and Basil Read is in business rescue.
Nonetheless, there are signs that the
local construction industry is picking
up, but we need to see many more real
opportunities if the embattled sector is
to survive 2019.
was saying holds true: that the capacity
in the country will have been reduced
by then, and the industry will not be
able to absorb the projects and we’ll
be looking outside.”
Macozoma shared that Sanral has
awarded two mega projects on the
N2 Wild Coast at a cost of R3-billion,
with a further seven packages soon to
be tendered for a budgeted amount
of an additional R6-billion. “It is our
hope that with the help of government
and industry players, we can unlock
the rest of the R128-billion worth of
national road projects that are sitting at
Sanral right now, not able to be rolled
out because there’s a general anti-toll
sentiment in the country.”
Nonetheless, the current Sanral
2018/19 non-toll budget allocation
amounts to R54-billion, plus another
R15-billion for the toll portfolio
that will go towards traditional
maintenance and priorities capex.
“We are the stimulus before the
[Ramaphosa] stimulus package,” said
Macozoma.
Other projects that appear to be
progressing is the upgrade of the
container terminal in the Durban
harbour. There are also indications
that the second phase of the Lesotho
Highlands project is at last getting into
gear. nn
Skhumbuzo Macozoma, CEO of
Sanral, speaking at the SAFCEC Annual
National Conference in October,
provided an outline of the hold-
ups in the project pipeline. “Supply
chain reforms in government have
sought to strengthen good governance
in procurement of infrastructure
projects. However, there are serious
unintended consequences that
must be addressed with National
Treasury, including project delays
and cancellations, and conflict with
construction general conditions of
contract. This is becoming a serious
issue that is threatening to hamstring
government from releasing tenders to
the benefit of industry and the delivery
of infrastructure.”
He noted that the impasse with
National Treasury had led to 50 of
Sanral’s contracts not proceeding in
the previous financial year, and that
this would affect the construction
industry with an 18-month lag in
contracts awarded, as most of these
delayed contracts are still in a design
phase as a result. Things should return
to normal after that, Macozoma hopes,
“unless of course what the President
High hopes of Sanral
Sanral’s CEO, Skhumbuzo Macozoma,
speaking at the SAFCEC Annual
National Conference in October 2018.
a consulting engineer to scope the
preliminary phases and feasibility.
They were wanting to go straight
from concept to committing the
municipality to full design and come
up with a construction budget — but
it was completely open-ended,” says
Campbell.
“Much depends upon when the
election is held in 2019, and how long
the period of uncertainty will continue.
If dragged out, we might well lose all
of the opportunity of 2019. On the
R400-billion stimulus package, there
is not sufficient clarity as to whether it
is new money or repackaging of what’s
been talked about previously, but at a
minimum, it is an endorsement of the
fact that infrastructure development
is recognised as a top priority. I
know there is huge appetite from
the private sector and banking sector
for infrastructure — and we need to
stimulate our economy first before
looking to foreign investment. That’s
why it’s important to get the elections
behind us, establish political certainty,
and create a continuum of positive
trajectory.
“My message to the engineering
industry is: 2018 has been a frustrating
year, but at least there’s hope whereas
this time last year, there was a sense
of hopelessness. For our membership,
it’s been a mixed bag — some have
done well, and others not. But most
are looking cross border for new
opportunities. The local market
should pick up once the elections are
behind us.”
Jason Muscat, FNB senior industry
analyst, adds: “We remain downbeat
on the prospects for the construction
sector, civil in particular, as there
were few concrete plans and timelines
outlined in the stimulus package.
While we do think the focus on
infrastructure is correct and sorely
needed, Treasury does not have the
fiscal headroom to finance many of
these proposed projects.
“The R50-billion allocation will be
budget neutral, taking from under-
performing departments, but the scale
of investment required to revive the
domestic civil sector is far beyond
what has been proposed. I am afraid
until we know more, we have to
Jason Muscat, FNB senior industry
analyst.
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