South Africa’s R600-billion public infrastructure programme has emerged as the “only game in town” as mining and industrial projects are realigned to the reality for slower growth.

For this reason, more and more attention is being paid to whether government and the key spending State-owned enterprises, such as Eskom and Transnet and Airports Company of South Africa (Acsa), have the balance sheets and the organisational capacities to sustain the programme.

There is little question that the December announcement by Eskom that it had decided to terminate its procurement processes for the multibillion-rand Nuclear 1 project gave the market some pause.

While the board’s announcement was framed by a government assurance that South Africa remained committed to a large-scale nuclear investment, the lack of detail and the absence of a timeframe raised some concern.

If Eskom – which runs very little risk of overinvestment, given the supply-side deficits that could become particularly acute from about 2016, when much of its existing fleet will either have to be retrofitted with life-enhancing solutions, or shut – can curtail investment plans, what about more demand-sensitive utilities such as Transnet and Acsa?

Now, there is no hint that Transnet has any intention of curtailing projects.

In fact, the R6-billion contract for 212 diesel locomotives, which include an option to possibly extend that procurement to 400 new diesel locomotives, is said to be imminent. True, the contract was meant to have been concluded in 2008, but Transnet insiders feel the delay has had some virtue in the sense that it will now be concluded in an environment where the power relations between suppliers and buyers appear to be shifting in favour of the latter.

CFO Chris Wells is also on record as saying that he foresaw no material constraint to Transnet raising the R13-billion required to part-fund its R21-billion capital programme for 2008/9.

In other words, Transnet’s capital plans appear to be intact. What is less clear is the longevity of the spending cycle. Early in 2008, there was much talk about the possibility of brining other projects into the five-year spending cycle, which could have materially expanded the R80-billion programme.

Given slowing conditions, particularly among its key commodity and manufacturing clients, this acceleration is now far less likely.

Less certain is the spending trajectory at Acsa. The airports utility has spent massively over the past five years in a bid to match capacity to demand. However, there is talk that some of its post-2010 capital plans are being reviewed and that it has delayed the issuing of certain enquiries over the past few months.

But there is a view that, while the nuclear projects have been placed on the backburner, commercial and retail developments are struggling, and some of the medium-term Acsa projects could take longer to materialise, that pipeline could be replenished from three other key sources, perhaps four.

The first is the independent power producer (IPP) programme, which is now far more critical to close the supply-side gaps than ever before. In October last year, Eskom unveiled the names of 23 national and international developers that had prequalified to produce electricity under the utility’s multisite base load IPP programme.

These companies have been issued with formal requests for proposals and final bids will close in May, with financial close expected to be concluded in the first quarter of 2010. Now, given that these IPPs will have to operate from 2012 to 2017, there is going to have to be a frenzy of construction activity during 2010 and 2011 to meet those deadlines.

CIC Energy, which is developing the Mmamabula coal-mine and power project in Botswana, is optimistic of reaching a deal with Eskom on a power purchase agreement as well as financial close by mid-2009. Once those have been concluded, construction will start almost immediately.

Then there are the water projects. Some of these are pure maintenance interventions, particularly at the municipal level, but there are also a number of bulk infrastructure projects evolving. The big one would be the R7,3-billion implementation of phase two of the Lesotho Highlands project.

But there are also a number of other bulk water projects, including the completion of the Olifants River Water Resource Development project phase 2, in Limpopo province, as well as several big water pipelines.

Thirdly, there are the public transport and roads projects, which could include a significant rail investment by the South African Rail Commuter Corporation. But there will have to also be a material upscaling of the road maintenance programme, particularly at provincial and municipal level.

Lastly, there is also potential to extend the cycle by paying closer attention to social infrastructure such as housing, schools, hospitals and prisons. Some believe there should be a particular thrust around affordable housing, which could be conceived as a growth stimulus package for the economy.

Infrastructure, and housing, could play a role in stimulating growth during the downturn, but it is going to require efforts, both in replenishing the pipeline and in building delivery capacity, particularly in the housing environment.

Such an approach could provide relatively stable demand for key inputs, as well as for the construction industry.

Undoubtedly, the key challenge will be funding.

Everyone is leaning on the development finance institutions, including those that could previously have turned to the commercial sector. All countries are also turning to infrastructure for economic stimulus.

For that reason, South Africa is going to have to position itself as a destination of choice, by having a clear and easily fundable pipeline of projects.

But as importantly, project champions are going to have to have the energy, savvy, resilience and credibility needed to indicate why money should flow in this direction rather than to the many other worthy projects that are likely to arise over the next few months and years.