Civil Engineering December 2022 | Vol 30 No 11

E ncouragingly, this year’s budget allocated R812.5 billion over the next three years for infrastructure investment, and work on some major pro- jects is already underway. The economy’s hope that these budget allocations are supported by real investment figures un- fortunately shows that the government’s ‘real’ investment in public-sector infra- structure has been dwindling over the past few years compared to allocations. NEED FOR PRIVATE SECTOR INVESTMENT However, the government cannot do this on its own as it does not have sufficient resources (technical, funding and struc- turing) to undertake all these targeted projects. Private-public partnerships (PPPs) in various forms are considered the most achievable investment structure – with a concessioning approach being key to implementation risk reduction. South Africa does have some positive precedent from the early 2000s, with PPPs now reaching the end of the concession periods and obtaining follow up bids for brownfield expansion opportunities. Transnet National Ports Authority (TNPA) has issued a number of requests for infor- mation followed by requests for proposal for port-related infrastructure upgrades, e.g. tank storage, LNG, berth expansions. PORT EXPANSION PLANS TNPA is repositioning its western region ports to efficiently facilitate trade via a seven-year, R16.1 billion infrastructure development programme at the ports of Mossel Bay, Saldanha and Cape Town. The railway links to these ports will also be upgraded, providing further PPP opportunities. Transnet revealed that it would cost R100 billion to expand its Durban Port over a 10-year period, while expansion plans have also been proposed for Gqeberha’s Ngqura Port. It is encouraging to see that Transnet is finally doing what it has been talking about for years. Linked to the ports is brownfield concessions and the potential opening up of the market for old order land lease contracts, largely for fuel storage and ancillary storage facilities on Transnet land. Land leases signed with existing incumbents some 25 years ago for key strategic areas are now coming up for renewal or new concessions. This may result in brownfield expansion for new 25-year lease periods or some churn in this market. CREDIT RISK IMPACTS / OPPORTUNITIES / MITIGANTS A distinction must be made between con- cessions that rely on government offtakes or support and those that relate to market risk by the concessionaire – these clearly have different risk profiles and thus different levels of interest from prospec- tive concessionaires or investors. Set out below is a typical split for the generic infrastructure term and opportu- nity, ranked according to investor interest. Q Q Market risk: Q Q Gas opportunities (LNG ideas) Q Q Fuel storage Q Q Government support: Q Q REIPPP / Gas power Q Q Transmission Q Q Partial / sponsor support: Q Q Gautrain Q Q Single line rail Q Q Difficult to fund: Q Q Education Q Q Transport Certain infrastructure, like gas op- portunities (LNG ideas) and fuel storage, are a clear opportunity without Government support, but partial support can be achieved for certain infrastruc- ture projects to achieve a successful funding solution. The prospect of PPPs becoming unlocked in South Africa and the region is an exciting one, especially for project finance advisory companies who have the opportunity to assist private sector potential concessionaires with possible investments in these projects.  PPPs key to filling the funding gap Robert Futter Executive Director Cresco Group Africa Andy Tant Director Cresco Group Africa The government’s National Development Plan 2030, which is aimed at eliminating poverty and reducing inequality by 2030, relies on the development of economic infrastructure that promotes economic activity as a key enabler to achieving its goals. 26 December 2022  Civil Engineering I ndustry perspec t i ve