Description
The trend in SOE investment expenditure is set to be reversed in coming years, particularly through the massive R134 billion capital expenditure programmes of Eskom and Transnet planned for the next five to seven years in South Africa’s energy and transport infrastructure, respectively. This will be the largest infrastructure development programme in many years and will provide a major stimulus for industrial development in the country. The importance of this capital expenditure (capex) becomes even more significant considering that total fixed investment in the country amounted to R226 billion in 2004, with public corporations contributing just over R24 billion to this amount in the same year.
Eskom’s infrastructure investment is aimed at increasing the utility’s generation capacity by 5 300 megawatts to 41 500 megawatts. The objective is to re-commission mothballed power stations such as Camden, Komati and Grootvlei, whilst also creating new generation capacity and increased transmission capacity in many areas of the country, including Johannesburg, Bloemfontein, Richards Bay and the Cape Peninsula, as well as supply lines to Coega (Budget Review 2005).
Transnet’s capital expenditure programme is aimed at improving the quality and efficiency of the country’s rail network, major ports and harbours. A substantial portion of this investment will be directed towards locomotives, wagons, signalling equipment and various types of cargo handling equipment (cranes, straddle carriers, etc.).
The investment plans of Eskom and Transnet are intended to address existing backlogs and capacity constraints, whilst creating a solid foundation for increased private sector fixed investment to expand its productive capacity and thus enabling the South African economy to achieve a substantially higher and sustainable pace of economic growth over the medium to long term.
