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SANRAL
SETS ITS SIGHTS ON A MASSIVE R28 BILLION ECONOMIC INJECTION INTO THE CONSTRUCTION INDUSTRY OVER THE NEXT FEW MONTHS
The South African National Roads Agency SOC Limited (SANRAL) will inject R28 billion into the economy over the next six months, starting with the conclusion of 77 contracts worth more than R6 billion which were put out to tender at the end of last year.
This will be followed by at least another 70 tenders before the end of the first half of this year, indicating the national roads agency’s strong role in the economic recovery of the country through its investment in infrastructure development. SANRAL has invested more than R120 billion into the economy over the past five years.
Last year, SANRAL celebrated 25 years since its inception in 1998 under the first administration of President Nelson Mandela. Its mandate is to develop, build and maintain South Africa’s national road network, while ensuring that it makes a significant difference in the lives of people living in communities affected by these roads.
South Africa has a total road network of approximately 750,000km with an estimated value of R2.1 trillion, the longest road network on the African continent and the 11th longest in the world.
SANRAL manages the national road network of 23,559km, which equates to four percent (4%) of South Africa’s total road network.
This four percent carries 40% of all annual vehicle traffic and up to 70% of all long-distance freight. In short, SANRAL oversees a critically important road network and injects billions of rands into the economy through maintenance as well as the construction of new roads and bridges.
This four percent carries 40% of all annual vehicle traffic and up to 70% of all long-distance freight. In short, SANRAL oversees a critically important road network and injects billions of rands into the economy through maintenance as well as the construction of new roads and bridges.
The construction and maintenance of road infrastructure has a direct impact on the movement of goods and people across South Africa, which impacts overall economic growth.
In the last five years SANRAL has rolled out more than 1,200 projects
worth some R120-billion. For the construction industry, this gives real meaning to public-private partnerships in which the stateowned enterprises play a significant role in investments in transport infrastructure.
These 1,200 projects mean that ordinary citizens who were previously excluded from economic opportunities have found ways to do business and participate in the economy. The impact of the government’s investments in road infrastructure is felt far beyond small businesses; it penetrates deep into the hearts of marginalised communities. This illustrates how national government has created an economic climate conducive to growth, with the public sector helping to drive economic recovery, creating jobs and dignity for South Africans, and ultimately fighting poverty and inequality.
In January, SANRAL announced an injection of up to R28 billion into the construction industry in the first half of this year. As part of SANRAL’s efforts to deepen transformation and in terms of its Interim Preferential Procurement Policy (PPP), at least 30% of these will be allocated to smaller black-owned construction companies. Thro ugh these contracts, SANRAL aims to ensure that small businesses graduate to become major construction companies.
SANRAL’s Chief Executive Officer (CEO), Reginald Demana, said that wherever the SANRAL projects are, the agency has a mandate to ensure that value flows through to smal l, medium and micro enterprises (SMMEs) and local communities.
The announcement comes after SANRAL closed 77 tenders worth R6.43 billion in December 2023. The agency is on a mission to accelerate work in the construction industry early in the first half of 2024. SANRAL intends to put out at least another 70 tenders to the market in the next couple of weeks resulting in about R28 billion of tenders advertised under the Interim PPP in the current 2023/2024 financial year.
The 77 tenders were readvertised following the SANRAL Board’s withdrawal of the Preferential Procurement Policy (PPP) which it had adopted in May 2023. The adoption of a new PPP in May 2023 was necessitated by the Constitutional Court judgment of February 2022. The case between Afribusiness NPC and the Minister of Finance nullified SANRAL’s PPP, which was effective at the time, and led to SANRAL’s introduction of a new PPP aimed at accelerating the slow pace of transformation in the road construction industry.
The Board announced on 24 October 2023 that it had withdrawn the PPP after several construction companies launched legal challenges against the policy.
These challenges resulted in SANRAL being prevented from processing tenders worth billions of Rands, with significant negative consequences for the construction industry and related jobs.
In the interest of avoiding protracted legal battles, the Board withdrew the policy while at the same time committing the roads agency to move speedily to consult interested and affected parties on a proposed interim PPP.
Subsequently SANRAL launched a national public consultative process which began on Tuesday 31 October and ended on 21 November 2023. The consultations were well attended and all oral input as well as 162 written comments were considered in developing the Interim PPP.
The work that SANRAL has put out to market is spread across the entire country through its four regions:
• The Western Region (Western Cape and Northern Cape) will get contracts worth R600 million.
• The Southern Region (Eastern Cape) will get contracts worth R2.8 billion.
• The Eastern Region (Free State and KwaZulu-Natal) will get contracts worth R2.1 billion.
• The Northern Region (Gauteng, Limpopo, Mpumalanga and North West) will get contracts worth over R500 million.
The Eastern and Southern regions are allocated much bigger portions as they encompass significant infrastructure projects such as the N2/N3 expansion in KwaZulu-Natal and N2 Wild Coast project in the Eastern Cape.
“The full rollout of the additional contracts, that we are going to issue will include dividing the R28 billion across the entire country, in all provinces. We try and make sure that we are distributing work and tenders equitably so that we don't leave any part of the country feeling that we are not looking after the national road network in their area,” said Demana.
SANRAL is also rolling out massive projects across the country over the next few years, some of which will move well into the next decade.
Some of the biggest projects underway are the following:
KwaZulu-Natal is the site of a R40bn project to upgrade and expand the N2 and N3 freeways, part of our country’s major transport corridor between the economic capital of the continent, Johannesburg in Gauteng, and the port city of Durban in KZN.
This project entails approximately 135km of construction works along the N2 (55km from Lovu River on the South Coast to Umdloti on the North Coast) and N3 (80km from Durban to Pietermaritzburg). It will create more than 15,000 job opportunities over the eight (8) to ten (10) years of the project. There are six (6) of the fourteen (14) packages currently under construction and there are a lot more in the pipeline.
The Eastern Cape is host to the more than R20bn N2 Wild Coast Road project, a 410km stretch of road from East London to the Mtamvuna River on the boundary of the Eastern Cape and KwaZulu-Natal (KZN).
The N2WCR project features two mega-bridges, Mtentu and Msikaba, and strategically positioned to connect four provinces: Western Cape, Eastern Cape, KwaZulu-Natal and Mpumalanga. Construction will create approximately 8,000 direct full-time equivalent jobs, with a wage bill of roughly R750 million and between 21,300 and 28,100 indirect jobs.
The R573 Moloto Road project is estimated to cost R11.5 billion and spans the provinces of Gauteng, Limpopo and Mpumalanga leading to some 12,000 jobs across the three provinces. SANRAL has invested R3.7 billion for the first phase in the Mpumalanga and Limpopo sections. SMMEs will benefit to the tune of 30% of the project value. Work is progressing steadily across all three provinces.
As SANRAL embarks on this extensive rollout of tenders, the aim is to stimulate economic growth, promote infrastructure, development and create opportunities across the country.
CONTACT DETAILS
Tel: +27 (0) 12 844 8000
Website: www.nra.co.za
SANRAL Head Office: South African National Roads Agency SOC Limited (SANRAL) 48 Tambotie Avenue, Val de Grace, Pretoria, 0184 PO Box 415, Pretoria, 0001
