INFRASTRUCTURE: Eskom gets more than just a bailout
Over three years, the utility will get 85% of the budget for energy expenditure, to spend on Medupi and Kusile
The government plans to invest R865bn in infrastructure in the next three years.
According to the National Treasury, state-owned entities (SOEs) will account for most of the capital investment, spending a projected R339bn over three years.
Municipalities will spend R205bn over the same period and provinces R185bn. The Treasury says in the Budget Review that the bulk of the allocations to SOEs such as Eskom, Transnet and the SA National Roads Agency (Sanral) will go towards the expansion of power generation capacity, upgrading and expanding the transport network and the improvement of sanitation and water services.
"Energy expenditure is expected to total R158.1bn over the next three years, accounting for 18.3% of total infrastructure spending. Eskom accounts for R134.3bn, or 85%, of this," the Treasury says.
In the three years, Eskom’s biggest projects will be the Medupi and Kusile power stations.
A total of R17.4bn has been set aside for the government programme to broaden access to electricity. In the next three years, the programme will add an estimated 590,500 new connections to the power grid.
The Treasury says R313.9bn, or 36.3%, of the investment in infrastructure has been earmarked for transport and logistics. Transnet’s capital expenditure is expected to amount to R102bn in the three years.
The government has allocated R41.5bn to the Passenger Rail Agency of SA (Prasa) to modernise the rail network. This includes the provision of 125 new trains for Metrorail as part of the rolling stock fleet renewal programme.
Over the three years, Prasa will get R6.8bn for signalling upgrades, R5.2bn to overhaul and refurbish coaches and R3bn for other rail-related infrastructure upgrades.
Addressing the media on Wednesday before delivering the budget speech, finance minister Tito Mboweni said: "If I had my way I would put more money in railways. Given a choice between SAA and Prasa, I would put more money in railways. That is where there is value. The majority of our people use taxis and trains."
Mboweni said the government should spend more money on programmes with social impact. "If you had R100bn, where would you rather put that? Would you invest it in the airline industry, taxi industry or railway industry, which transports the working class? You need to be clear about your objectives. Let us have those conversations about where you deploy your scarce resources."
The government has set aside R23bn for the next three years for the proposed restructuring of Eskom, amounting to R69bn.
Treasury director-general Dondo Mogajane says in the Budget Review that the government is taking steps to strengthen policy certainty, improve the effectiveness of infrastructure spending and "rebuild" SOEs, to bolster private sector confidence and boost investment.
Sanral will get an additional R3.5bn between 2019/2020 and 2021/2022 for its non-toll national roads portfolio. This will allow the agency to resurface an additional 3,300km and strengthen 1,500km of national roads.
Mboweni said the government has allocated more than R30bn to build new schools and maintain schooling infrastructure.
Pam Golding Properties Andrew Golding says: "The allocation of over R30bn for new schools and maintaining schooling infrastructure, subsidised education and training for the poor, R19.8bn for industrial business incentives, disbursements by the Jobs Fund and allocation to the Small Enterprise Development Agency are all positive moves to foster job creation."
Some R2.8bn has been allocated to eradicate pit latrines at more than 2,400 schools.
Mboweni said the infrastructure fund, which the government plans to strengthen with R100bn over the next three years, will accelerate R526bn worth of projects by bringing in the private sector and development finance institutions.
According to the Treasury, while spending on economic infrastructure has grown in the past decade, spending on social infrastructure, which includes schools, hospitals and sanitation, has slowed down.
Meanwhile, of the R865bn planned for public sector infrastructure spending, R17.3bn, or 2%, has been earmarked for public-private partnerships (PPPs), with most of these being transport and accommodation projects.
There are several PPP projects under consideration. These include extending the Gautrain network and the construction of a Gauteng provincial government office precinct in the Joburg CBD.
Azar Jammine, director and chief economist at Econometrix, says that R865bn expenditure in the medium term is not enough to stimulate economic growth.
"It will keep things as they are."