Over the next three years, an estimated R1,03 trillion will be spent on public infrastructure projects by state-owned companies, other public entities, and national, provincial and local governments.
Image: File picture
Finance Minister Enoch Godongwana is sticking to his initial plan on infrastructure investment, committing an estimated R1,03 trillion to projects over the next three years.
It was reported last month that Godongwana was going to allocate R1 trillion after the planned budget speech did not take place. In his revised address on Wednesday, the minister stuck to his original plan.
Over the next three years, an estimated R1,03 trillion will be spent on public infrastructure projects by state-owned companies, other public entities, and national, provincial and local governments.
The minister said R402 billion will be for transport and logistics, with R100 billion of investments in the South African National Roads Agency Limited (Sanral). An amount of R219,2 billion will be spent on energy infrastructure, and R156,3 billion will flow to water and sanitation infrastructure.
The 2025 budget adds R46,7 billion in funding for infrastructure projects over the next three years.
Godongwana said the Passenger Rail Agency of South Africa is making progress to rebuild infrastructure, and they have provisionally allocated an additional R19,2bn term for critical signalling upgrades.
In the budget document, Finance department director-general, Dr Duncan Pieterse, explained that to boost growth and employment, the government is significantly upscaling its infrastructure delivery programme.
"There are major opportunities to reduce the backlog in public infrastructure while creating jobs and boosting economic activity. Accordingly, the regulations for public-private partnerships have been simplified to attract greater private-sector participation; multiple windows of the Budget Facility for Infrastructure are being introduced; and reforms are being made to municipal-owned trading services to ensure they are financially sustainable and efficiently provide water, electricity and refuse collection.
"Capital allocations increase by 8.1% over the next three years, including funding for passenger rail and disaster reconstruction," Pieterse said.
Finance Minister Enoch Gondongwana.
Image: GCIS/Supplied
Godongwana explained that several of the reforms are designed to help the state deliver infrastructure and encourage private-sector investment.
"During 2025/26, a single structure overseen by the National Treasury will be established to coordinate state participation in project preparation and planning, public-private partnerships (PPPs), funding and credit guarantees.
“It will be established by merging two units currently in the Government Technical Advisory Centre that coordinate PPPs and capital appraisals with the Infrastructure Fund in the Development Bank of Southern Africa.
"Streamlining the framework for public-private partnerships Infrastructure reforms are underpinned by a commitment to significantly increase partnerships with the private sector."
On February 7, 2025, amendments to Treasury Regulations for PPPs were gazetted. From June 2025, projects below a total value of R2 billion will no longer have to clear "onerous approval processes" intended for large projects before proceeding.
"A clear framework is being established to receive and process unsolicited PPP proposals or bids from the private sector. Revised manuals and guidelines on PPPs are being produced and will be made available to the public. New legislative amendments and regulations for municipal PPPs will also be introduced in 2025," he said.
He also explained that the Budget Facility for Infrastructure (BFI) plays a central role in the capital budgeting system by recommending funding for projects that are jointly funded from other sources, including state-owned companies, municipal-owned resources and the private sector.
For the 2025 budget cycle, the BFI has approved nine projects with a total value of R55.5 billion, of which R15.3 billion will be funded by the BFI.
"The approved projects address a wide range of service delivery and economic growth needs, such as hospital infrastructure, transport and logistics, and water. The 2025 budget introduces a performance-based conditional grant for certain trading service entities that provide basic services, such as municipal water. This will incentivise financial and operational reforms to improve their functioning and sustainability."
Cape Times