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SOEs will struggle to fund infrastructure

Oct 28 2012 15:49 Sapa

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Johannesburg - State-owned enterprises will find it difficult to raise money to implement the government's proposed strategic infrastructure projects (SIPs), the DA said on Sunday.

"The DA is concerned about the capacity of SOEs to raise funds for and effectively implement the build programme," said Democratic Alliance MP David Ross.

"The lack of clarity around the planned projects also makes it difficult for the private sector to get involved," he said.

"With government debt approaching 40%, there is little fiscal space for the National Treasury to finance the programme in its entirety, hence the reliance on SOEs."

In his Medium Term Budget Policy Statement (MTBPS) on Thursday, Finance Minister Pravin Gordhan spoke about the Presidential Infrastructure Co-ordinating Commission's plan to implement 18 proposed SIPs in the next three years at a cost of R845bn.

The SIPs were part of a broader initiative by the government which would result in it spending R4 trillion on infrastructure projects in the next 15 years.

"Essentially, there are three avenues to fund infrastructure projects in South Africa -- public funding, private-public partnerships and raising funds directly by taxing citizens," said Ross.

He found it surprising that, since the announcement of the infrastructure programme, scant details had been provided on issues relating to finance and implementation.

"A look at the balance sheets of Eskom and Transnet exacerbates our concerns and calls into question their capacity to raise finance without further state guarantees," he said.

Ross said he would ask Gordhan to provide further details on the proposed infrastructure build programme.

"There can be no doubt that increasing investment in economic infrastructure is the right plan going forward. We do, however, need to conduct an honest review of the capabilities to finance and implement this programme," he said.
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