Raubex awarded two Sanral contracts worth R2.87bn

JSE-listed construction group Raubex has been awarded two major contracts by the South African National Roads Agency (Sanral), together valued at R2.87 billion, providing further evidence that President Cyril Ramaphosa’s massive infrastructure investment drive to stimulate the economy post Covid-19 is starting to happen.

Raubex CEO Rudolf Fourie said on Tuesday both contract awards relate to projects that were among the 50 strategic infrastructure projects (SIPs) gazetted by the government.

“It looks like Sanral is back strongly,” he said.

“We are over the moon. We have never had so much work.”

Fourie said Raubex has now been awarded three SIP projects and the latest contract awards by Sanral have increased the company’s secured order book to R14.23 billion.

Read: First post-pandemic-recovery infrastructure projects gazetted

Raubex reported last month that its Sanral order book was at a record high of R3.26 billion after dropping to only R207.6 million in February 2019.

This followed Raubex reporting earlier this month it had been awarded a R1.48 billion contract for the upgrade of the N3 from Dardanelles to Lynnfield Park as well as some smaller contracts by Sanral.

The latest awards are for the upgrading of:

• National Route 2 from KwaMashu Interchange, Section 25 (28.6km) to Umdloti River Bridge, Section 26 (14.0km) for R1.43 billion, which has a contract period of 40 months.
• National Route 3, Section 2, from Cato Ridge (20.2km) to Dardanelles (26.6km) for R1.44 billion, which has a contract period of 51 months.

These awards follow Sanral announcing in August that it was ready to implement R30 billion worth of construction projects.

Read: Sanral ready to implement R30bn worth of construction projects

Fourie said on Tuesday there are still quite a few other tenders that Sanral has to award, including one big project on the N3 where Raubex was not the lowest bidder and is therefore not in the running for.

Fourie estimates that Sanral has now awarded between R12 billion and R14 billion of the R30 billion of construction projects it indicated it was ready to implement.

Smaller projects in the pipeline

“We are still waiting for quite a few smaller project awards. I guess there are probably about R3 billion [worth] of quite a number of contracts that we still could be in the running for. But this is now all the big bids that we submitted which we were in the running for,” he said.

However, Fourie said Sanral last week advertised two large Wild Coast road projects contracts and there is still the project to upgrade the EB Cloete Interchange on the N3 near Durban.

“This is now new work,” he said.

WBHO Group CEO Wolfgang Neff confirmed on Tuesday it was awarded a contract by Sanral for the improvement on National Route N2 Sections 14 and 15 from Green River to the Buffalo River Bridge valued at between R450 million and R500 million.

“That is the only [Sanral] contract we have been awarded to date but we priced probably R20 billion worth of work for Sanral in the last 12 months.

“A lot of the contracts remain unawarded. But they have started to award contracts and Raubex has been fortunate to get one or two,” he said.

Neff expressed concern about the cancellation of some tenders for frivolous reasons.

He said the OR Tambo International and Cape Town International airports runway contracts were cancelled but this was understandable because of the impact of Covid-19 on the tourism industry and international travel.

However, Neff said the R4.5 billion tender to upgrade the EB Cloete Interchange had been cancelled because none of the bidders had qualified in terms of their technical submission, with WBHO disqualified for frivolous reasons.

Neff said a public-private partnership (PPP) tender for the Bisho Legislature had been issued for the second time and also cancelled.

“To put a PPP together costs a fortune but a day before it was due to be submitted they cancelled it. It’s very annoying,” he said.

However, Neff said on the positive side, WBHO recently submitted a bid for the Kopanong Government Precinct in Johannesburg PPP.

“We believe they are working through it. We are quite encouraged to hear that,” he said.

WBHO financial director Charles Henwood said they are a little worried about the government’s ability to fund its infrastructure expenditure plan.

“But I’m very hopeful that they can scratch the money together to do this because this is what the country needs,” he said.

Read: Finance institutions commit ‘tens of billions’ to infrastructure

Andries van Heerden, chief executive of JSE-listed Afrimat, in October stressed that the government’s massive infrastructure investment drive was starting to happen.

Green shoots

“There is a lot of scepticism out there but we are starting to see the green shoots of the government’s drive,” he said.

Afrimat is a leading open-pit mining company providing construction materials, industrial minerals and bulk commodities.

“In our experience, it’s not as fast as we would all like to see it but it’s there. We definitely see upticks,” he said.

Peregrine Capital executive chair David Fraser said the Sanral contract awards to Raubex “is fantastic news”.

Fraser said it is real evidence of the projects coming through now that the construction industry has been waiting for.

“It’s very nice news that the stuff is coming through, these awards are happening, there is money to be spent, the guys will mobilise and the country will start engaging the flywheel and will start buying materials, will start employing some labour, will start buying some kit and we [the economy] will get going again, which is what we need.

“So kudos to Sanral,” he said.