PROVINCIAL INFRASTRUCTURE GRANT

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PROVINCIAL INFRASTRUCTURE GRANT

• NCOP
• 06 March 2006

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OVERVIEW

• Background
• Trends in the allocation of infrastructure grant
• Grant framework
• Schedule 4 grant
• Allocation criteria
• Conditions
• Administration of the grant
• Performance/Impact of the grant
• Growth in budgets and expenditure trends
• Intervention to improve planning and spending
  capacity

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Background

• Decline in capex between 1995/96 and 1998/99
  from R6 billion to R3,9 billion 2000/01 due to
  rising social services budgets and personnel
  costs
• Provincial Infrastructure Grant was introduced in
  2000/01 with the allocation of R300 million
• The 2000/01 allocation was allocated to four
  provinces that had major damage of their
  infrastructure due to floods
• In 2001/02 the grant was allocated R1,4bn rising
  to R 3,3 b in 2004/05, increase averaging 33,7
• Allocation further rises from R3,7 billion in
  2005/6 to R5,7 billion 2008/09

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BACKGROUND

• To facilitate turnaround in the budgets for
  education, health roads infrastructure
• Grant allocated to prov. treasuries to prioritise
  infrastructure within these guidelines
• 40 each education and roads
• 13 health
• 7 rural/agricuture infrastructure
• Grant allocation criteria
• Initially it was an average of equitable share
  and infrastructure backlogs (education and
  Health)
• Formula revised to include road network as the
  component each component has equal shares
  (33.3)

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Allocation of Provincial Infrastructure Grant
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Type of the grant Schedule 4

• Allocation supplements infrastructure budgets
• Not a sector or project specific grant its
  allocated to provincial treasuries
• Conditions of the grant allow for monitoring of
  the budgets of sectors targeted by the grant
• Enables a single reporting on infrastructure,
  with the exception of health which has to report
  on hospital revitalization programme
• Assessment of performance of the grant focuses on
  the entire budget of the targeted sectors
• Facilitate better infrastructure planning for the
  sectors
• Enables implementation of good practises to
  improve overall performance in the delivery of
  infrastructure

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Grant frameworkPurpose of the Grant

• Help accelerate infrastructure delivery
• New construction, rehabilitation targeting
  health, education and roads
• Enhance capacity to delivery infrastructure
• Improve planning and management
• Improve institutional arrangements for
  infrastructure delivery
• Increase labor intensity for specific types of
  projects in line with EPWP guidelines

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Grant FrameworkConditions of the Grant

• Submission of infrastructure plans, including
  list of prioritised projects
• List of projects should be completed by and
  submitted to implementing agents by 31 Oct 06,
  for the next FY
• Compliance with EPWP guidelines
• Submission of quarterly reports on spending and
  physical progress with projects
• Monthly IYM and quarterly reports must show that
  good progress in spending of budget

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Administration of the grant

• DOR Act provides for withholding and stopping of
  the grant when
• Underspending on the allocation is evident
• Failure to comply with the requirements persists
• Unlike schedule 5 grants, withholding of this
  grant is based on the assessment of the
  performance of the targeted sector
• Sector allocation guidelines would be used to
  determine how much to withhold in cases of non
  compliance

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Why Underspending?

• Underspending of capex persists
• R1,8bn in 2004/05
• R700m projected as per the 3rd quarter S32 report
• Problems relating to
• planning (no long term, and forward project
  planning)
• budgeting not based on prioritised projects,
  and performance
• Weakness in institutional arrangements for
  delivery (client/agency relationship)
• Delays in procurement processes
• Capacity in departments and public works
• Weaknesses in reporting and monitoring

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INTERVENTIONS

• Infrastructure Delivery Improvement Programme to
  support
• Development of appropriate capacity for
  infrastructure delivery (people, skills, systems)
• Infrastructure plans that provide a clear measure
  of needs, supply, backlogs prioritisation
• Development enforcement of contracts, or
  service level agreements
• Improve quality of information reported
• DOR Act aims to fast-track improvement in
  infrastructure delivery
• Increasing funding for infrastructure delivery
• Addressing delivery capacity gaps in departments
• Improving forward planning for projects
• Managing implementing agents thru SDAs
• Enforce reporting and monitoring
• Threats of loosing the funds where spending is
  slow

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ROLLOUT STRATEGY FOR IDIP

• Phased approach started with all education,
  selected 2 health and roads
• Partnering with Construction Industry Development
  Board and DBSA
• National departments key stakeholders (members of
  steering committee)
• Provincial Treasury oversee
• coordinate and monitor provincially

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COMPONENTS OF IDIP

• Capacity Building strategy
• Technical assistants recruited and placed in
  participating departments
• Identify gaps in systems and capacity
• Develop capacitation plan with the department
  indicating skills required, costs and timeframes
  for turnaround
• Facilitate implementation of toolkit to correct
  identified deficiencies in delivery systems
• Mentoring and coaching staff counterpart
  assigned to work with TA and delivery team
• Provides tools to guide the development of
  appropriate procedures and systems include
• Delivery Management Process
• Infrastructure Planning
• Infrastructure Programme management and Project
  Delivery
• Construction Procurement

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CHALLENGES PILOT PHASE

• Weakness in planning project prioritisation
• Demographic and socio-economic trends analysis
• Identification of needs from the institutions ie
  schools
• Inadequate asset management systems
• Deficiencies in forward planning
• budgets not based on prioritised projects,
  performance,
• Delays in project planning and design failure to
  make effective use of MTEF process
• Weaknesses in institutional arrangement (for own
  notes poor relationships, blame shifting )
• Deficiencies in skills in both departments and
  dpw challange attracting and retaining skills

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Strengthening the interventionsIDIP Phase II
Roll Out

• IDIP to support, DOR Act enforced to
  progressively improve planning budget
• Infrastructure plans are reviewed prioritised
  projects to be firmed up by end October
• Capacity gaps are addressed
• Alignment of infrastructure planning and
  budgeting with MTEF budget cycle
• Capital budgets provide for forward planning
• Strengthen the infrastructure monitoring system
  to enforce forward planning
• Institutional arrangement - bridge the gap in the
  relationships and strengthen contractual
  arrangements
• A process to improve information system and
  analysis ie asset registers needs analysis

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THANK YOU