South Africa’s crisis-ridden construction industry has received a boost, with the SA National Roads Agency (Sanral) reporting that it will issue major road construction tenders to the value of more than R40 billion over the next two to three years.
The expenditure commitment has been welcomed by various organisations and analysts, with Sanral confirming that its roads network forms the backbone of the country’s transport system and serves as a catalyst for balanced economic growth, business confidence, investment and the transformation of society.
Louw Kannemeyer, the engineering executive at Sanral, says National Treasury has allocated about R21.5 billion a year for the maintenance and improvement of Sanral’s 19 262km non-toll network, which is going towards a total of 940 projects, 325 of which are already under construction.
Not just one or two R500m projects …
Kannemeyer says the new projects will include about 90 major capital works projects larger than R500 million each, which will go out to tender during the three-year medium-term period.
“We expect a surge in road construction projects over the medium-term framework as part of the broader national efforts to invest in economic infrastructure.”
He adds: “We are confident this investment will help to boost the construction sector, which has been under severe pressure in recent years, and also cascade down to black-owned and emerging enterprises who will receive much larger shares of tenders in future.”
Webster Mfebe, CEO of the SA Forum of Civil Engineering Contractors, says the forum welcomes Sanral’s multi-billion rand road projects announcement because it signals “the beginning of the end of the capital drought that has rendered many construction firms endangered species”.
“It also heralds a new dawn for an industry that is currently declining at an alarming rate,” he says.
“Sanral is well-known for its excellent track record in rolling out projects competently and paying contractors promptly. We sincerely hope it will maintain the same commendable performance standards following the stagnation of road projects in the last two years.”
Wayne Duvenage, CEO of the Organisation Undoing Tax Abuse, says the allocation mentioned by Sanral is a lot more than the agency has been allocated in the past by Treasury, adding that there is no doubt the construction industry needs a boost and Sanral is one of those organisations that could do so.
“It sounds good and right. We have always been of the view that the country needs Sanral,” says Duvenage.
“The country needs the engineers. The country needs good road building.
“But it needs Sanral to work in the best interests of the public, and when it introduces tolling schemes, it must be done properly. It didn’t do that on e-tolling and that is the only reason its credibility as a brand was knocked heavily in 2010 up until now.
“That does not mean to say we don’t need Sanral. We need it to do its work but to do it properly.”
Duvenage says the question is whether the country is getting these roads at the best price, where the projects are located, and how transparent the tender processes are.
More than R8bn for KZN this year
Kannemeyer says tenders to the value of R8.3 billion for construction work on the N3 between Durban and Pietermaritzburg will go out to tender during the current financial year and will be financed through the infrastructure stimulus package announced by President Cyril Ramaphosa last year.
This will include seven major tenders for projects on the N3, which will be issued within the next three months once the regulatory approvals have been received and land acquisition finalised, he says.
Maintenance projects across the country
Kannemeyer adds that starting this month (August), Sanral will issue smaller tenders related to routine road maintenance and periodic maintenance across the entire Sanral network and in all nine provinces.
The more than 50 tenders will be released in a controlled manner so the market is not flooded, he says.
“The projects will provide economic and social infrastructure that has the potential to unlock economic growth, stimulate local economies and create jobs within the communities that are located close to the construction activities.”
Kannemeyer adds that a growing share of contracts will be allocated to black-owned construction companies and enterprises owned by women, the youth and the disabled.
This is in line with Sanral’s long-term vision, with the road agency committing in terms of its Horizon 2030 policy to the transformation of the construction and engineering sectors through the allocation of tenders to new entrants in these sectors.
Kannemeyer says Sanral has, over the past six months, brokered memorandums of understanding between emerging companies and major suppliers of construction equipment and machinery, which gives black-owned companies greater access to financing, expertise, and the sophisticated equipment required to tender for larger contracts.
“We are confident the R40 billion in tenders that are in the pipeline will benefit the broader construction sector and contribute to the growth of new enterprises who have been excluded from major contracts in the past,” he says.
Originally appeared on Moneyweb