R50 billion boost for roads in South Africa

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03-09-2024
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The South African National Roads Agency (SANRAL) has announced that it is set to inject around R50 billion into the economy during the 2024/25 financial through various road project tenders.

On 2 September 2024, SANRAL said that it is currently evaluating 96 tenders worth R35 billion, while 86 contracts worth R15 billion have already been awarded since the start of the 2024/25 financial year on 1 April 2024.

The tenders currently in evaluation are:

• 34 tenders in the Northern Region (Gauteng, North West, Limpopo and Mpumalanga) worth R16.5 billion;
• 24 tenders in the Southern Region (Eastern Cape) worth R3.8 billion;
• 12 tenders in the Western Region (Western Cape and Northern Cape) worth R2 billion;
• 12 tenders in the Eastern Region (KwaZulu-Natal and Free State) worth R11.7 billion; and
• 14 tenders at Head Office, worth R839 million.

 SANRAL’s Chief Executive Officer (CEO), Reginald Demana, said such a move shows the entity’s “commitment to economic recovery for the road construction sector and South Africa at large.”

Ryan Gaines, the CEO of City Logistics (a leading privately owned logistics company in South Africa), recently told News24 that bad roads are severely impacting the economy.

“When our vehicles – and indeed the vehicles owned by other logistics companies – travel on these roads, this results in more breakdowns and increased vehicle maintenance costs,” said Gaines.

“Naturally, these expenses impact businesses, particularly those involved in transportation and logistics, leading to higher consumer prices.”

The president of the South African Road Federation, Philip Hendricks, said that “in 2014, the road maintenance backlog was reported as being R197 billion. Recent studies estimate it to be now more than R400-billion.” 

However, President Cyril Ramaphosa said at this year’s State of the Nationa Address (SONA) that these issues are being addressed, citing that SANRAL has awarded more than 1,200 projects to the value of R120 billion over the past five years (and counting).

Demana echoed that SANRAL is attempting to nip these issues in the bud, however these recent tenders follow “a significant setback to our procurement processes in 2023/24 when legal challenges to SANRAL’s Preferential Procurement Policy (PPP) brought all tenders to a halt.”

Throughout 2023, SANRAL faced legal woes over its preferential procurement policy from the construction industry because it adopted a policy in May of 2023 that heightened requirements for firms to have a favourable Broad-Based Black Economic Empowerment profile to win tenders from the state-owned enterprise.

In October, the SANRAL board announced its decision to withdraw its PPP, citing a desire to avoid “lengthy legal battles.”

Now, “the awarded contracts, worth R15 billion, as well as the tenders worth R35 billion – which are currently at various stages of evaluation – are being adjudicated in terms of the Interim PPP,” said Demana.

On 1 July 2024, SANRAL appointed a Chief Procurement Officer for “improved stability at an operational level.”

The SANRAL CEO said that the SOE is pushing ahead to try get more tenders out to marker, with “a further R1.8 billion worth of tenders to be advertised in the coming days and weeks.”

Demana also gave an update on some ongoing road projects across the country.

“SANRAL has numerous multi-billion-rand projects underway across the country which ensure that the construction industry is thriving, creating jobs and new opportunities for small, medium and micro enterprises (SMMEs),” added the CEO.

Among them is the notable R20 billion N2 Wild Coast Road (N2WCR) project is picking up speed with four major contracts underway, including Msikaba Bridge, Mtentu Bridge, the construction of the road linking the Msikaba and Mtentu bridges, and the road leading from Lingeni Intersection to Msikaba Bridge.

“SANRAL will continue… developing, financing and maintaining the national road network to improve the lives of all South Africans, one kilometre at a time,” concluded the CEO.