Patel keen for private funding of infrastructure

• Warning that the energy challenge can slow down industrialisation, the minister says an all-hands-on-deck approach is needed

Trade, industry & competition minister Ebrahim Patel says limited funding for infrastructure plans announced by the department of public works has plagued the quick rollout of infrastructure projects.

In response, the ministry will be looking to draw on capital resources of the private sector and global development agencies to enable faster progress.

Speaking on the sidelines of the ProudlySA Buy local summit, Patel acknowledged the cries of the despondent metals and engineering, steel and construction sectors over the slow pace of infrastructure project rollout and have called for private sector inclusion to solve challenges.

Revealing a funding gap to execute plans, he said the cabinet has identified the value of partnerships with the private sector as a way of mobilising resources faster than the government can do on its own.

“We’ve announced the infrastructure plan, the minister of public works and infrastructure has put that plan on the table and the big issue has been how do you fund the plan,” said Patel.

“We don’t have a shortage of projects, we’ve had a constraint on the funding side so we are opening that up more to the private sector to look for publicprivate partnerships in many of these infrastructure areas so you bring additional resources there.”

Gazetted in March 2022, the National Infrastructure Plan (NDP) 2050 identifies the most critical actions needed for sustained improvement in public infrastructure delivery. The cost of delivering infrastructure to meet National Development Plan development objectives is estimated to exceed R6-trillion between 2016 and 2040, with energy and transport accounting for more than 72%.

The public sector is projected to spend R903bn on infrastructure over the medium term.

Infrastructure delivery has been touted as one of the most significant contributors to SA’s transition from a historically closed minerals economy to one that is inclusive and globally and regionally integrated, with low carbon emissions.

Infrastructure-reliant sectors have expressed frustration over the slow pace at which projects are being introduced, saying the capacity and ability are there, but demand is a problem.

Patel said a multistakeholder approach is being developed while the department is also working with development finance agencies, such as the New Development Bank (Brics bank), which has been making money available for public infrastructure in SA.

“So if we can draw on our own resources as government, the resources of the private sector and of global development agencies then we ought to be able to move much faster.”

The Steel & Engineering Industries Federation of Southern Africa (Seifsa) is among the latest of national associations to tally the cost of load-shedding. Its latest survey found that the energy crisis is also stalling investment in the sector, with a collective R2.64bn in investment and expansion plans scuppered by its members due to the uncertainty created by the electricity crisis.

Articulating that the three big challenges that industrialisation efforts need to deal with are energy, the pace of spending on infrastructure and disruptions that Covid-19 created in supply chains, Patel said increasing the supply of energy for manufacturers is a big factor.

“The national energy plan that the president put on the table now needs to be implemented with both speed and a high level of focus because if we are not able to crack the energy challenges it will significantly slow down any effort at industrialisation,” said Patel.

Invest SA, which sits in the department, has formed a specialist team to help investors who want to invest in renewable energy to navigate the regulatory landscape. Patel said the team’s main task is to help determine how things can be done faster while complying with regulatory standards.

“One of the problems has been we are a highly regulated society in so many areas where we are seeking to promote good public policies but in the process, our regulations are not always smart,” said the minister.

“A smart regulation is one that achieves the same goal but with less bureaucracy, less red tape and fewer delays with fewer processes and that requires a greater integration in government and that’s what the president has been emphasising.”

In a move set to create know-how capability and jobs in SA, the department is also looking at ways to boost the manufacture of local components that go into the energy supply industry, such as solar photovoltaic panels. This will give industries more resilience in the future while the country won’t be subjected to disruptions in global supply chains.

Patel emphasised that “there are foreign players that are prepared to come in”, highlighting Saudi investor Acwa Power as one such foreign company that is using its own concentrated solar thermal power (CSP) technological advancements to partner with local players.

The group is building a 100MW concentrated solar thermal power plant — in which it holds a 49% stake — that has 12 hours of full-load energy storage. After completion in the fourth quarter of 2023, it will be able to reliably deliver a stable electricity supply to more than 200,000 homes during peak demand periods even well after the sun has set.

“I think we need to lose the lack of confidence that we have as SA, that we can’t do things,” Patel said. “There are a lot of sources of innovation and excellence in SA and so we want to try to use SA ingenuity even in the supply chains.”