The Presidential Infrastructure Co-ordinating Commission (PICC) has made good progress in identifying projects and clarifying long-term investment plans to drive economic change, Finance Minister Pravin Gordhan said on Wednesday.
Tabling his 2012/13 Budget in the National Assembly, Gordhan said the Budget Review listed 43 major infrastructure projects, adding up to R3.2-trillion in spending.
Over the medium-term expenditure framework (MTEF) period ahead, approved and budgeted infrastructure plans amounted to R845-billion, of which just under R300-billion was in the energy sector and R262-billion in transport and logistics projects.
These projects would be funded in various ways.
The fiscus met the costs of public-service facilities such as schools and courtrooms, hospitals, and rural roads.
Public entities such as Eskom and Transnet financed their investments from internally generated surpluses and borrowing from the capital market.
This meant they had to generate sufficient revenue from tariffs and charges to repay debt over time, and cover operating and maintenance costs.
In some cases, a mix of tax finance and cost recovery was appropriate.
"We make budget contributions to the costs of commuter transport services and electricity and water service delivery to low-income communities, for example," Gordhan said.
Private sector investment played a substantial role in several sectors. Access to telecommunications services was financed by private operators, and the airlines industry had several private sector players.
The first round of over 1200MW of renewable energy projects was recently successfully tendered to independent power producers.
Private sector capacity could also be mobilised through construction and operating concessions, for example in the management of industrial development zones, freight logistics and ports operations.
The Development Bank of Southern Africa would play a co-ordinating role in raising finance, in partnership with multilateral finance institutions, foreign investors, and other investment funds.
The Industrial Development Corporation similarly invested directly in income-generating projects, in partnership with other investors.
Gordhan said South Africa had deep and liquid capital markets, through which long-term capital could be raised at competitive rates by government, state enterprises and the private sector.
"Our development finance institutions are capable of raising capital and co-financing investments of the private sector, state entities, and municipalities.
"These are considerable strengths — they mean that we do not have to rely on expensive external finance, or complex structured arrangements."
However, the key consideration was the impact and economic viability of the infrastructure investments.
The PICC would ensure expert project assessment, subject to appropriate standards of review and public accountability — a critical requirement before investment decisions were taken.
No good project would be short of funding, Gordhan said.