Sanral awards nearly R7bn in contracts for N2 Wild Coast and N11 highways

The South African National Roads Agency (Sanral) awarded four major construction tenders this week for projects on the new N2 Wild Coast highway in the Eastern Cape and the N11 in KwaZulu-Natal that are collectively worth almost R7 billion.

The contract awards will provide a welcome boost to South Africa’s beleaguered construction industry, which has been suffering for several years from a lack of major tender awards.

Sanral said as much in a statement on Wednesday: “These awards will help boost the construction sector and should be seen as part of the broader national effort by government to invest in economic infrastructure.”

These tender awards follow Sanral in November last year awarding four contracts valued at R17.4 billion that were cancelled earlier in 2022. The cancellations were because of a material irregularity in the tender process, with a board resolution made in January 2020 not being implemented in the evaluation of these tenders.

Read:

Chinese companies won the bulk of Sanral’s cancelled tenders [Nov 2022]

Sanral appoints DBSA to oversee award of R17.4bn cancelled [June 2022]

Sanral cancels R17.47bn in adjudicated tenders [May 2022]

Local JSE-listed construction companies WBHO and Raubex feature prominently in the latest tender awards.

The four contracts awarded this week:

• Construction of the N2 Wild Coast Highway from Msikaba Bridge to Mtentu Bridge in the Eastern Cape, awarded to the WBHO H&I JV. This 54-month project has a contract value of R2.54 billion.
• Rehabilitation of the N2 from Mt Frere to Ngcweleni River in the Eastern Cape, awarded to Rumdel Construction Cape. This 45-month contract has a contract value of R1.2 billion.
• Construction of the N2 Wild Coast Highway from Lingeni Intersection to Msikaba Bridge in the Eastern Cape, awarded to the WBHO-Edwin Construction JV. This 45-month project has a contract value of R2.29 billion.
• Upgrade of the N11 from the N11/R103 Interchange to Elandslaagte in KwaZulu-Natal, which connects Ladysmith and  This R864.8 million tender was awarded to Raubex Construction and is a 39-month project.

Peregrine Capital executive chair David Fraser said on Wednesday it is positive to see these contract awards, particularly as they are significant contracts, and they will start to build momentum in the construction industry.

Catch up

“Long may they continue. Hopefully it tells us that Sanral is going to continue to catch up the [contract award] backlog,” added Fraser.

“They did nothing for so long. Firstly, they have to clear the backlog and secondly put out the current contracts as well. I certainly hope this isn’t the last [of the awards] and there is a continued pipeline of contact awards that keep coming out,” he said.

Sanral highlighted the benefit of these contract awards to black-owned small, medium and micro enterprises (SMMEs), stating that substantial subcontracting on these four projects is collectively worth R2.1 billion.

It made this statement against the backdrop of the continued disruption of construction sites around the country by business forums and the so-called construction mafia.

Read:

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Calgro M3’s KZN exit due to construction mafia and other issues [Oct 2022]

Sanral board dismisses construction industry concerns after cancelling R17.5bn in tenders [May 2022]

Sanral board chair Themba Mhambi said stakeholder engagement sessions will be prioritised in the affected communities to ensure that local businesses and job seekers have access to relevant information that will enable them to pursue and participate in the economic opportunities flowing from these projects.

“Through the establishment of Project Liaison Committees (PLCs), we will also ensure fairness and transparency in all the appointments of ubcontractors and the engagement of local labour,” he said.

Sanral said 35% of the two Wild Coast highway construction contracts will be sub-contracted to black-owned SMMEs, with this percentage exceeding Sanral’s transformation targets.

It added that 30% of the N2 from Mt Frere to Ngcweleni River and the N11 from the N11/R103 Interchange to Elandslaagte contracts will be subcontracted to SMMEs.

Job creation

Sanral’s board said these four projects are also a platform for large-scale job creation, skills development, knowledge transfer and poverty relief, especially in the rural communities of South Africa.

“The significantly long construction periods afford sustained economic opportunities for these communities,” it added.

“If the Sanral separately funded community development projects are factored into the equation, the number of SMME opportunities – as well as training and job opportunities for ordinary members of our communities – significantly increases, thus tangibly reducing unemployment, inequality and poverty.”

Mhambi said the roads agency wants to see meaningful transformation that truly changes people’s lives for the better and not simply impressive statistics.

“While we are alive to the cries from our industry for more projects to be put out to tender, we are equally committed to fair and transparent procurement processes, as required by law, but also the need to prioritise the economic development of those previously denied opportunities to Sanral projects,” he added.

“We also have to respond to the need, as admonished by the Constitution, to advance persons or categories of persons disadvantaged by unfair discrimination.

“Moving forward, striking a balance between safeguarding our big and established companies and creating opportunities for black businesses at higher and lower CIDB [Construction Industry Development Board] grades will be a material deliverable within Sanral,” said Mhambi.

The project awards announced by Sanral in November last year were for:

• Mtentu Bridge (Eastern Cape) – R3.4 billion to the China Communications Construction Company (CCCC) MECSA Joint Venture (JV).
• R56 Matatiele rehabilitation (Eastern Cape) – just over R1 billion to Down Touch Investments.
• Ashburton Interchange (KwaZulu-Natal) – R1.814 billion to the Base Major/China State Construction Engineering Corporation (CSCEC) JV. Base Major, founded by Chinese businessman and company director Stephen J. Lu, is registered in South Africa.
• Durban’s EB Cloete Interchange Overhaul – R4.3 billion to Base Major/CSCEC JV.