Port Elizabeth government confirmed an initial grant yesterday of R58,2m from the trade and industry department's critical infrastructure fund' towards the construction of the much talked about Coega project, which comprises an industrial development zone and a deep-water port.
The marine tender for the construction of Ngqurha, as the port is to be known, is to be issued tomorrow.
The provision of the funding part of about R2,6bn that government says it is going to spend on the project signals the beginning of actual work on a project that has been bedevilled by opposition, ranging from questions about its financial viability to environmental impact, as well as allegations of corruption.
Trade and Industry Minister Alec Erwin hit out at the critics, saying government makes 'no apologies for taking risks and investing ahead'. There was no comparable investment being undertaken on a similar scale in any other part of the southern hemisphere, the minister said.
Erwin said: 'Cabinet would not allow this amount of money as you know we have a very tough treasury if we were not able to persuade them that this is a viable project.'
Asked whether the treasury department had been opposed to the project, Erwin said this was not so, but said: 'This is a cabinet decision. There will always be some issues on any project.'
Erwin declined to comment on progress in the negotiations between his department and global resources group BHP-Billiton. The company is looking at the possibility of building a 1,75bn aluminum smelter. Government is keen to have the project anchor the Coega industrial development zone.
The company had earlier undertaken a feasibility study on a 1bn investment in a zinc refinery in Coega, but this was shelved, partly because of delays in the Coega development.
Erwin said: 'The environmental laws of the country will be applied to the letter.' He said also that it was government's duty to ensure the environmental sustainability of the project.
As with any project, interested parties were free to appeal or oppose if they wished, and government could not stop them, said Erwin. He said 'proper argumentation, well founded' was what was lacking from those opposed to the project.
Public Enterprises Minister Jeff Radebe said electricity utility Eskom was on track with its R1,8bn investment on upgrading power for the project. At least one potential investor was believed to have pulled out of Coega because of the poor power supply infrastructure.
Yesterday's meeting was between government, the provincial government led by Eastern Cape Premier Makhenkesi Stofile and his economic affairs, MEC Enoch Godongwana, the metropolitan council led by Mayor Nceba Faku, local business, and implementing arm, Coega Development Corporation (CDC).
CDC business development executive Graham Price remained adamant about the industrial development zone's positive effect on the local economy.
'The impact of this potential investment would be a R6bn contribution to the country's gross domestic product and R8,6bn in spin-off investments linked to the larger ones,' Price said, insisting the project would result in the creation of more than 20000 permanent and more than 50000 construction jobs.
He said the CDC 'can now have more detailed discussions with investors with regard to the cost of infrastructure and land, for example, as well as issues around incentives'. He said the CDC would initially target the metallurgical and motor industry sectors.
