Exxaro Resources and Roads Agency Limpopo (RAL) signed a Memorandum of Agreement (MoA) for the upgrade of a road in Lephalale, Limpopo Province on Wednesday, 25 April 2018. This is the second strategic partnership between Exxaro and RAL since 2015.
The project, to be implemented jointly by RAL and Exxaro, is for the upgrade from gravel to tarroad D2001 that stretches 9.56 kilometres. The estimated cost of the project is R100 million, and Exxaro will contribute 100% of the project cost.
Exxaro Resources
This is the second strategic partnership between Exxaro Resources and Roads Agency Limpopo SOC. The first project, which is still in implementation stage is due for completion by end of November 2018. This is for the upgrading of several roads connecting Ga-Seleka villages to the Commercial Centre of Lephalale which was jointly identified through the Integrated Development Plan (IDP) of the Lephalale Local Municipality, and the provision for co-funding was subsequently included in Exxaro Grootegeluk’s Social and Labour Plan (SLP). The cost of the project is R250m, and Exxaro contributed R71.2m or 28.5% towards that construction with RAL carrying the balance of R178.8m.
Exxaro’s Executive Head of Coal Operations Dr Nombasa Tsengwa, highlighted that, “the combined oversight role that RAL and Exxaro have through their respective Project Managers and Engineers has been professional and make for a successful partnership.”
With this ongoing experience, Exxaro has committed a 100% contribution towards the upgrade of road D2001. She says Exxaro decided to fund this project not only because it is a mandatory requirement for Exxaro and future project developments, but also because it is not currently provided for in the RAL budget.
As a responsible citizen, Exxaro understands that Public-Private Partnerships (PPP) are required to alleviate the backlog on infrastructure to power better lives for all communities.”
Roads Agency Limpopo
Roads Agency Limpopo CEO Maselaganye Matji said the private sector has confidence in the way the Agency conducts business. The strategic partnership approach has been one of the key tenets of RAL’s successful turnaround strategy. Since 2015, RAL has raised a consolidated R382 million from the private sector to co-fund the construction and maintenance of roads in economically strategic areas.
“The amount has now increased to R482m and fast approaching a half a billion milestone,” says Mr Matji.
“Most partnership contributions are between 25% and 30%, and those who have experience of working with us have increased these contributions significantly in subsequent projects.”
At current estimates, RAL will need R160 billion to maintain and upgrade the entire road network in Limpopo. The budget allocation from provincial treasury for the entire Department of Public Works, Roads and Infrastructure for 2018/19 sits at R3.1 billion, of which only R988.9 million is allocated to RAL for this purpose.
These private sector contributions have helped to supplement the grant allocation from government of building roads.
“We are, therefore, making a steady dent in the battle against the road infrastructure backlog that has been the bane of the province,” he said.
Roads Agency Limpopo ringfence 30% of every project value to the employment of local Small Medium and Micro Enterprises (SMMEs) and 10% to the employment of local labourers in areas where it implements its construction projects.
Benefits of the project
The proposed road infrastructure project will facilitate for the commercial development in Lephalale and contribute significantly towards reducing the cost of doing business in the area.
The extension of the upgrade will predominantly assist with easy access to the operations whilst also benefitting all other road users in the area as well by reducing travelling time and improved road safety of communities.
Other benefits will include job creation and people development through provision of accredited training.
Once the Northern and the Southern links of the Ga-Seleka and Kitty roads projects are complete, these roads will successfully link a total of thirteen rural villages.
It is estimated the project will take 10 (ten) months to construct and is scheduled for completion during the 2019/20 financial year.