Picture: SUPPLIED
Picture: SUPPLIED

Chemicals group AECI, which owns a business that supplies road construction material, is eyeing a piece of SA National Roads Agency’s (Sanral’s) multibillion-rand road construction tenders. 

Sanral, the state-owned entity responsible for the management, maintenance and development of SA’s road network, is set to release new contracts valued at more than R40bn between the 2019 and 2021 financial years.

Getting a share of the contract would be a major boost for AECI given the depressed state of the construction and building industry. 

The maintenance and improvement of Sanral’s non-toll network of 19,262km is funded through an allocation from the national department of transport. Allocations for 2019-20 and 20120-21 are R21.2bn and R21.7bn, respectively, while R21.5bn has been set aside for 2021-22.

“Over the medium-term expenditure framework (MTEF) period, the above allocation has been apportioned to a total of 940 projects, of which 325 are currently in construction, and the rest still to be tendered. This includes 90 capital expenditure projects in excess of R500m each still to be tendered over the three-year MTEF period,” says Sanral spokesman Vusi Mona. 

Mona says there are seven major projects (valued at about R8.3bn) on the N3 alone — between Pietermaritzburg and Durban — that will be going out to construction tender during the course of the 2019-20 financial year as part of a stimulus allocation received by Sanral.

“We are finalising outstanding regulatory approvals (such as environmental impact assessment and mining permits) and land acquisitions on some of these projects to enable construction tenders to be issued within the next three months or earlier,” Mona says. The agency will commence with the issuing of smaller tenders from next week.

“These tenders are related to routine maintenance, periodic maintenance, etc across the whole network. These more than 50 tenders will be released in controlled manner so as not to the flood the market,” he says.

This is good news for AECI, whose business Much Asphalt is a   manufacturer and supplier of hot and cold mix asphalt products and a manufacturer, supplier and applicator of bituminous road binders, emulsions, primes, pre-coats and modified binders.

“What Sanral has said is that, while in the past they gave contracts to four or five players, they are now looking for SMEs and want to put 15 to 20 contracts out. It is a great initiative. This presents opportunities for us because we supply the asphalt,” says AECI CEO Mark Dytor.  

“The model we are looking at is how do we, with our technical expertise, help SMEs succeed in terms of getting the right quality of paving”.

The asphalt products are used in the construction and maintenance of roads.

Dytor says the company is also eyeing opportunities in water infrastructure.

“The government has announced that it intends to spend R90bn a year in water infrastructure and water chemicals. The government has identified water as a strategic area. Some of our municipalities are going to have to invest in water treatment plants, equipment and chemicals. We are well-positioned to take that opportunity.”  

Human settlements, water and sanitation minister Lindiwe Sisulu says SA’s water management is poor. Of the 144 municipalities with the constitutional responsibility for water supply and sanitation, 33% are regarded as dysfunctional, while more than 50% have limited technical staff. She has also highlighted ageing infrastructure, nonpayment for services and financial mismanagement.

“It is not a good story, it is not a situation anyone should be proud of and it is not a situation we should tolerate. I intend to detail for you what steps will be taken to turn this around in the shortest possible time, within the resources made available to us in this financial year,” she says in her department budget vote speech.

“SA invests R42bn per year into water infrastructure and R13bn into sanitation. Yet the estimated capital investment requirement is R90bn per year over the next 10 years”.

Zulu says the department will be in discussion with finance minister Tito Mboweni over the funding or potential private sector partnership to revive the Mzimvubu dam in the Eastern Cape. 

Sisulu says municipalities owe the country’s water boards and the department a combined R14bn for raw water and other water services.

njobenis@businesslive.co.za