the infrastructure development bill economic development portfolio committee 11 november 2013 1
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The Infrastructure Development Bill
Economic Development Portfolio Committee
11 November 2013
1
• Background
• Objectives
• Detailed analysis
Overview
2
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?
4
• 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?
5
6
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
7
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
8
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
12
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
13
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
15
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
24
• 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
25
• 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
26
• 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
27
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
28
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
29
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
30
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
31
• 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
32
• 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
33
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
35
Re a leboha!
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