The Infrastructure Development Bill

Economic Development Portfolio Committee

11 November 2013

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• Background

• Objectives

• Detailed analysis

Overview

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Background

• Achieving the vision of the National Development Plan requires substantial investment in infrastructure

• In the economic strategy of government, the New Growth Path, infrastructure is a major jobs driver in the economy, creating jobs in construction, maintenance and operations as well as unlocking economic potential in the wider economy

• Infrastructure can help to promote rural development and bring poorer provinces into the economic mainstream

• Infrastructure is a means to improve service delivery by creating the access to electricity, sanitation and water as well as health-care

• Infrastructure in a key developer of skills• The supply of components for the infrastructure build-programme

can stimulate local industrialisation and the expansion of South African manufacturing for the domestic market as well as exports

• Infrastructure can address the spatial legacies and inequities of apartheid which continue to manifest two decades after the democratic change

Why focus on infrastructure?

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• In October 2010, infrastructure was identified as the key jobs driver whose development can support other jobs drivers such as mining and beneficiation, manufacturing, agriculture and agro-processing, tourism, the green economy and African regional integration.

• In July 2011, Cabinet established the Presidential Infrastructure Coordinating Commission (PICC)

• Work started immediately to identify obstacles to faster and more integrated delivery

• In February 2012, the President announced the National Infrastructure Plan in SONA. Implementation of infrastructure was speeded up.

• From April 2012, Strategic Integrated Projects were launches across the country

• In February 2013, the lessons of the first phase of implementation was set out in a Bill published for public comment

What steps were taken?

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Leveraging off the lessons of the past

2010 Soccer World Cup Build

Airport build programme Gautrain

Government has done a detailed analysis of lessons from other major infrastructure projects in the past

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What worked well?

Central coordination with direct Presidential oversight

A local organising committee with Ministerial oversight to take quick decisions

Well defined specifications and scope for SA from FIFA, passed as an Act of Parliament

Tight non-negotiable deadlines

Coordination between national, provincial and municipal structures

Public / private sector alignment and participation

Skills mobilisation

Small and large business development

Identified champions, by name, in each institution, tied into performance

Some implementation through municipal and provincial structures

National pride and satisfaction with build programme

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Risk analysis: what can or did go wrongIn an Infrastructure Plan of the size and magnitude that is planned, there are risks additional to the standard infrastructure risks. Some key risks:

Project management capacity which may be inadequate for the size of the Infrastructure Plan

Cost over-runs due to the complexity of managing multiple projects

Delays caused by regulatory and administrative decisions/lack of decisions

Lack of coherence between public entities or spheres of government, resulting in conflicts, lack of mandate alignment (“turf-wars”) or silo planning

Project scope-creep as different spheres are involved

Supplier collusion leading to over-pricing

Supply-constraints in steel, cement, bitumen, or in equipment (cranes, bulldozers, etc.) causing project bottlenecks and price escalation

Corruption in contracts which increase costs, delay implementation or render poor quality outputs

Shopfloor conflicts and Industrial action at critical times of the build programme, causing costly delays

Weak integration, resulting in some but not all key elements of an SIP being completed

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Risk analysis: what can go wrong Inadequate technical skills due to weak outputs at universities, improper gate-keeping by

professional associations, lack of opportunities for work-experience

Inadequate funding

Political conflict over tariffs or private equity in infrastructure projects

Lobbying by vested interests resulting in inappropriate project selection, vanity projects or over-design of specification

Conflicts between provinces over project selection or balance or over national-build decision

Neglect of rural projects due to capacity constraints in affected areas or lack of cashflow from users

Synchronisation challenges, with project completion dates not being in line with user needs or with connected components

Weak off-take agreements with end-users for bulk usage (rail, energy)

Easier export of minerals that undermine beneficiation policy goals

Weak negotiation of contract terms, resulting in inappropriate or unknown risks and costs to the public sector

Weak maintenance of built-projects

Land : example of the challenge experienced in gaining access to land for infrastructure build today

EIA, appeals and expropriation can take up to 6,5 years

• PICC agreed by Cabinet and established by President in second half of 2011

• National Infrastructure Plan adopted in February 2012

The PICC and the National Infrastructure Plan

The PICC•President•Deputy President•Ministers appointed by President•Premiers•SALGA and metro mayors

PICC Secretariat•Chaired by a Minister•Other Ministers and Deputy Ministers

PICC Technical Team

18 Strategic Integrated Projects (SIPS 11

PICC MANCO•Chaired by a Minister•Other Ministers, one Premier and one SALGA rep•DG of Presidency

• SIP 1: Opening the Northern Mining Belt

• SIP 2: Logistics and development corridor from Durban to Gauteng

• SIPs 3, 4, 5: Unlock economic opportunities on South East coast and the West Coast and in North West

• SIP 6, 7 and 11: Municipal infrastructure in 23 worst-served municipal districts, agro logistics and integrated urban planning including BRT systems

• SIPs 8, 9, 10: Energy security

• SIPs 12, 13, 14: schools, hospitals and universities

• SIP 15, 16: Information and Communication technologies and SKA

• SIP 17: African regional development

• SIP 18: Water and sanitation

The 18 SIPs

PICC

PICC Manco and Secretariat

SIP chair•Coordination•Mobilisation•Oversee Steering Committee

SIP coordinator

Steering committee•Relevant departments and agencies•Chaired by SIP coordinator•Prioritisation, strategic planning, unblocking

Accounting officers/authorities•Responsible for each project•No change in accounting responsibilities

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What has been achieved: examples

SIP coordinators and chairpersons have been appointed and work is

under way in all the SIPs

18 Strategic Integrated projects have been identified and SIP

launches have taken place to bring together

key stakeholders

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A National Infrastructure Plan has been adopted and is regularly updated. Current planning framework extends to 2040.

What has been achieved: examples

Regular monitoring of projects across the

infrastructure platforms take place. To date, 5 sets of Quarterly reports have been

tabled through Cabinet processes

On a quarterly basis PICC track the following areas on projects:1.Construction Spend2.Construction progress3.Jobs4.Localisation5.Schedule delays6.Significant developments requiring attention

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What has been achieved: examples

180 000 jobs sustained by projects in National

infrastructure Plan in June 2013

Localisation office

established with IDC

An increasing level of components are

manufactured locally – using new PPPFA

regulations

A National Skills Plan has

been developed

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What has been achieved: examples

Rollouts: Rea Vaya integrated public transport

Rollout: Grootvlei power station and rail

line

Rollout: ten new hospitals countrywide

Rollout: Port of Ngqura (EC)

and Dube Trade Port

(KZN)

Industrial development zone in Saldanha

Rollout: world’s largest

manganese sinter plant

Rollout: new car wagon in

Uitenhage, bus production in

Germiston and taxis in

eThekwini

Rollout: rural schools in E

Cape

Progress: Medupi Power

station in Limpopo

Rollout pending:

Spring Grove Dam and De Hoop Dam

Construction: large new

solar power plants and wind farms

What has been achieved: examples

R1 trillion in public investment in 2009-2014

6.4%

6.6%

6.8%

7.0%

7.2%

7.4%

7.6%

2 3 4 1 2 3 4 1 2 3 4 1 2

2010 2011 2012 2013

Public investment as % of GDP (quarterly)

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The Infrastructure Development Bill

• The Infrastructure Development Bill is intended to speed up and improve the delivery and implementation of social and economic infrastructure and to maximise the developmental impact. It does so through provisions to that deal with structures, timeframes, processes and outcomes.

 • First, it establishes in law the coordination structures of the PICC

to provide for executive authorities in all three spheres of government to meet on a regular basis to drive implementation of infrastructure.

 • Second, it provides for Strategic Integrated Projects (SIPs) that

connect and align a number of catalytic projects that together make up the National Infrastructure Plan.

 

What do we seek to achieve with the Bill

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• Third, it sets timeframes for the approval of regulatory decisions affecting the implementation of infrastructure projects. Instead of sequential approval processes, it provide for processes to run concurrently wherever possible. This ensures that the state works to a common deadline. This timeframe provides for public consultation.

• Fourth, it sets out processes of coordination that require regulatory authorities and cross-cutting departments to work closely together through SIP steering committees that will coordinate efforts to speed up the implementation of infrastructure construction and completion.

 • Fifth, it provides for the PICC to expropriate land required for

infrastructure development but makes such power subject to the constitution and any Act of parliament specifically dealing with expropriation, which is passed by parliament after the Bill becomes law. 

What do we seek to achieve with the Bill

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• Sixth, it sets out the mechanism through which developmental targets can be set for each major infrastructure project, covering areas such as youth employment targets, greening the economy, skills development and broad-based empowerment.

 • The Bill does not change the responsibilities of accounting officers

or authorities or the route for fiscal flows: line departments and public entities will receive money for specific infrastructure projects (eg DWA or DoE) and these departments will continue to be accountable to parliament for the spending of money.

 • The PICC's role is to coordinate the implementation of projects and

enhance the connection between projects (eg ensure that when a school is built, it has roads, sewage systems, water, electricity and ICT connectivity and that employment creation and industrialisation are maximised in the construction phase and through procurement of locally-manufactured components).

What do we seek to achieve with the Bill

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• A legal mandate for the PICC and its structures, and for maintenance of the National Infrastructure Plan.

• Specifically, the Bill aims:– To maintain the national structures of the PICC as

currently constituted– To mandate on-going updating and extension of the

National Infrastructure Plan– To identify key developmental elements of the

infrastructure programme– To clarify the role of departments and agencies in

managing SIPs– To establish procedures and structures to minimise

unnecessary delays in planning SIPs and in obtaining authorisations, permits and licences for the projects that they incorporate

– To set out timeframes for SIP planning processes

Objects of the Bill

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• The objects of the Act are:– Establishing the Presidential Infrastructure

Coordinating Commission and its structures in law– Identifying SIPs– Aligning resources across the state in support of SIPs– Providing for appointment of Ministers as chair of

strategic integrated projects– Providing for steering committees to supply technical

support and oversight for strategic integrated projects – Establishing processes and timeframes for the

implementation of strategic integrated projects– Ensuring that infrastructure promotes developmental

aims

Part 1: Definitions and Objects

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• Membership of the Commission is made up of the President, the Deputy President, Ministers designated by the President, Premiers, metro mayors and the chair of SALGA

• The PICC’s functions include:– To develop, maintain, and coordinate the implementation

and monitoring of the National Infrastructure Plan– To establish (“designate”) SIPs and ensure co-operation

across the state to implement them– To evaluate the impact of infrastructure projects on

economic and developmental goals– To address obstacles to implementation of infrastructure

plans – To maximise the developmental outcomes of infrastructure

investment

Part 2: The PICC and its structures

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• Clause 5 gives the PICC power to expropriate land– line with the Constitution and relevant laws– Aligned to Expropriation Bill– To allow for multiple public projects in a SIP

• Clause 6 provides for the appointment of PICC Manco by the President, with the functions of– Overseeing the Secretariat– Ensuring a coordinated approach to regulatory

requirements– Undertaking any other tasks delegated by the PICC– Strategic management of PICC

Part 2 - continued

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• Criteria for designation of a SIP: – National importance – Inclusion in the National Infrastructure Plan– Above a certain monetary value

• PICC must designate a Minister as chair of a SIP• The chair of a SIP:

– Convenes a forum of the executive authorities involved

– Coordinate implementation of the SIP– Ensure regular reports as required by the PICC

Part 3: SIPs

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• Clause 8:– Tender requirements

• PICC may determine if a SIP must go to out tender because state does not have capacity

• If yes, it will request the relevant Minister to oversee the process by the relevant accounting officer

– Every organ of state must ensure its land use and infrastructure plans are aligned with the SIPs

Part 3 - continued

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Secretariat• Members are Ministers/Deputy Ministers appointed by

the President• Chair is the Minister of Economic Development• Functions:

– Drive implementation of the SIPs– Appoint coordinators and steering committees– Monitor and evaluate progress– Issues frameworks and guidelines for SIPs– Manage day to day work of the PICC

Part 4: Implementing structures

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SIP Steering Committees• Chaired by SIP coordinators• Members:

– Relevant state entities– CIDB– Other experts appointed by PICC Secretariat, if

necessary• Do not displace accounting officers/ authorities on

individual projects• Strong provisions in Clause 12 prevent conflict of interest

of members and their families• Costs of the Steering Committee are borne by the

department of the SIP Chair

Part 4 - continued

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SIP Steering Committees• Inclusive team from across government to manage all the

regulatory and other requirements for successful implementation of a SIP

• Identify the individual components of a SIP• Develop project plans for the SIP• Ensure compliance with laws and identify what regulatory

requirements there are• Unblocking projects• Report progress regularly to the Secretariat

Part 4 - continued

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Avoiding regulatory delays (Clause 15):•The steering committee must ensure project managers know about regulatory and information requirements•Steering committee members should help projects with their applications so as to ensure they comply with regulatory requirements•If there is a refusal, the relevant authority must give reasons•All outcomes of applications to be reported immediately to the Secretariat

Part 4 - continued

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• Processes required to implement a SIP, including approvals, licences, authorisations and exemptions, should as far as possible run concurrently

• Schedule 2 has timeframes for specific processes. • Clause 18 provides for handling Environmental Impact

Assessments in line with Chapter 5 of the NEMA, which permits special procedures

Part 5: Processes

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• Minister of Economic Development must provide a quarterly progress report to the PICC

• Authorisation for delegations of authority in the PICC structures

• Minister in consultation with the PICC, to issue regulations and implementation frameworks for the SIPs on skills, the Green Economy, employment creation, youth employment, rural development and BBBEE; and must consult with the responsible line Ministers before doing so.

Part 6: General provisions

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Schedule 1: Scope • National and International Airports• ICT installations • Education institutions• Electricity transmission lines• Health care facilities• Human settlements, related

infrastructure/facilities• Economic facilities• Mines • Oil or gas pipelines, refineries or other

installations• Ports and harbours• Power stations or installations for harnessing any

source of energy• Productive rural and agricultural infrastructure• Public roads• Railways• Sewage works• Waste management and disposal • Water works and water infrastructure

Schedule 2: Timeframes for SIP planning and public consultation

•7 days to submit application and project plan•30 days for public consultation process on the application and project plan •52 days for relevant authority to review plan•60 days for submission of draft development and mitigation plan•44 days for consultation on the mitigation plan• 57 days for relevant authority to review development and mitigation plan and take regulatory decision

Schedules

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• The Bill has provisionally been tagged as a section 75 Bill by the State Law Advisor but the JTM decision is awaited

• Processes of consultation on the principles of the Bill or initial versions of the Bill included:– Government departments – PICC Council which included Premiers and local

government– Public comments solicited after the original Bill was

published in February 2013– Nedlac, which concluded the Bill does not fall within the

Nedlac Act since it essentially dealt with the internal structures of the state

Other issues

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Re a leboha!