No tender issued despite R4tril infrastructure announcement

MURRAY & Roberts said yesterday that, despite the government’s announcement that it planned to spend R4-trillion on infrastructure over the next 15 years, not a single tender has been issued for a major infrastructure project.

There was big state investment in fixed capital for the Soccer World Cup two years ago, but since then the government has been slow to issue new tenders and has been tardy in paying for work done.

National Planning Commission data shows a 30% fall in public sector spending since 2008.

Some state-owned enterprises, including Eskom and Transnet, have brought projects to the market since 2008, but these are not sufficient for a construction industry under pressure.

In a business update to investors yesterday, engineering and construction group Murray & Roberts said that, while it remained well positioned to participate in any projects that came to market, “at this stage, tender documents for major infrastructure projects have not yet been issued by government”.

“A major and growing infrastructural backlog exists in SA,” the company said in its update.

“At a recent Presidential Infrastructure Investment conference, President Jacob Zuma said SA would spend as much as R4- trillion on infrastructure development projects over the next 15 years, and about R844bn over the next three years.”

The firm said it was experiencing “difficult market conditions and pressure on margins”.

Mr Zuma said the government was implementing 18 strategic infrastructure projects identified by the Presidential Infrastructure Co-ordinating Commission.

There was no response yesterday to attempts to ascertain from the commission when tendering processes would start for the 18 projects, and what they entailed.

Deputy President Kgalema Motlanthe called on delegates at last month’s conference — which was attended by construction companies, financial institutions and equipment suppliers — to assist in the infrastructure drive.

First National Bank chief economist Cees Bruggemans said yesterday that the private sector had the capacity to deliver the much-needed projects, while the “public sector does not”.

AfriFocus Securities construction analyst Hugan Chetty said yesterday that the lowering of SA’s sovereign credit rating posed a big challenge for the government’s planned infrastructure funding, which would spill over to its entities such as Transnet and the South African National Roads Agency, which were seeking to raise capital internationally.

“The government needs to start pushing at least some projects such as roads, rail and water on stream because this uncertainty is likely to bring forth more infrastructural problems … The government needs to start putting projects on the market because the construction industry is banking on them for job creation.” Mr Chetty said.

Murray & Roberts also warned investors yesterday that its cementation business had been severely hit by the labour unrest in the mining sector. It said the cancellation of Lonmin’s K4 shaft project, significant delays on other projects and delays in the awarding of new projects all affected its domestic operations.

The company, which suffered an attributable loss of R736m for the year ended June, said its mining operations in Canada and Australia were experiencing “buoyant market conditions”.

“The growth in profits in these businesses will not be sufficient to offset the reduction in profits forecast by Murray & Roberts Cementation. The platform is thus expected to report a reduction in profit,” it said.