The optimistic outlook for continued economic growth and increased national revenue allows for a “marked increase” in infrastructure investment and capital spending by the public sector over the next three years, Finance Minister Trevor Manuel said in his 2006 Budget speech on Wednesday.

“Infrastructure investment, and skills development, are the main frontiers ahead, these are journeys that have just begun, and they promise unbounded opportunities for discovery, unprecedented opportunities for initiative and partnership,” Manual said.

Total infrastructure and capital spend in key public sectors is expected to rise by 24,3%, to R75,7-billion, in the 2006/7 fiscal year, and to R252-billion over the next three years.

This includes expenditure on water, sanitation, electricity, housing, education infrastructure, health, roads, rail and ports and law enforcement (courts police infrastructre and prisons), and forms a significant part of government’s previously-announced R372-billion total estimated public-sector infrastructure-related spending over the three-year medium-term expenditure framework (MTEF).

Further, the 2006 budget adds R34-billion to capital and infrastructure spending over the MTEF.

“The investment project is now well under way, and we will continue to see steady growth in infrastructure spending in the government accounts, in company reports and project announcements and noise of increasingly-busy construction sites,” Manuel said.

The National Treasury’s infrastructure project database currently has some 1 500 entries, with a further 10 000 projects in provincial files.

In his budget review, Manuel pointed out that public sector infrastructure spending increased sharply last year, as investment in electricity-generation capacity, ports infrastructure, water schemes, roads and telecommunications projects all gained momentum.

With infrastructure and capital expenditure at all levels of government expected to accelerate over the medium term, part of this will also be financed through greater claims by the public sector on capital markets, according to the budget review.

In the 2006 budget, housing and municipal infrastructure, local transport and water schemes are allocated an additional R9,3-billion.

Within the economic-services cluster, spending on transport infrastructure is the largest category, and will continue to grow strongly over the period ahead, together with water schemes and related services.

Some R3,5-billion has been added to the national roads and rail infrastructure spending plans, bringing the total to R21,4-billion, and R7,1-billion has been set aside as the national contribution to the Gautrain rapid-rail project.

Estimated expenditure on roads over the next three years is R63-billion, passenger and freight rail investments total R18-billion (excluding Gautrain) and investment in ports and port operations is expected to be R15-billion.

The 2006 budget also includes a contribution to the national investment commitments for the 2010 soccer World Cup.

Details of project allocations have not yet been allocated, but the National Treasury will spend up to R5-billion in dedicated infrastructure for the 2010 soccer World Cup, of which R3-billion is to be spent over the next three fiscal years, Manuel said.

Industrial-development zones, the pebble-bed modular reactor project, various research and technology initiatives, tourism promotion and support for business-process outsourcing have also received additional funding allocations.

R3,1-billion has also been added to defence modernisation and infrastructure, and investment in transport and communication will rise by 18%.

Over the medium term, estimated expenditure in the water sector, which includes dams, bulk pipelines, reticulation and treatment plants, amounts to just over R19-billion.

The electricity sector is expected to spend R58-billion over the MTEF period, growing at an average rate of 17% a year and driven by Eskom’s generation, transmission and distribution expansion project and household electrification projects at a municipal level.

Eskom’s revised 5-year capex plan includes R49,7-billion to be spent over the MTEF period.

About R100-billion will be invested in electricity generation capacity over the next decade, to be shared between Eskom and independent power producers.

The five-year estimate has been revised to R98-billion from a previously-published R110-billion.

Other electricity-generation projects include open-cycle gas turbine projects in Atlantis and Mossel Bay, which together amount to R2-billion and will be completed by 2007 and 2010 respectively.

Also over five years, an investment of R4-billion is expected for the combined cycle gas-turbine plants at Saldanha and Coega.

Further North, Eskom will also be a partner on the Inga river hydroelectric project in the DRC, with budgeted expenditure of R1,6-billion over five years.

State-owned Transnet is also in the process of revising its infrastructure plan as part of a broader corporate plan and expects to spend R32,7-billion in capex between 2005/6 and 2008/9.

On developmental infrastructure initiatives, Manuel said that R2,9 billion of national revenue, which has been raised through tax amnesty levies, will be assigned to joint public private partnership investments in community infrastructure and business development in low-income neighbourhoods.

A new grant programme for local development projects will also be established this year, which will specifically target public private partnerships to invest in infrastructure and community services in low-income residential neighbourhoods, Manuel said.

The municipal infrastructure grant remains the largest single infrastructure allocation from the national treasury, and has been increased in the budget by R800-million to R21,5-billion, over a three-year period.