Chairperson, hon members, today we take the unusual step of tabling a Special Adjustments Appropriation Bill.
Although we have occasionally had to table second adjustments budgets in previous years, this is the first time that an appropriation has been required before the usual adjustments budget which is scheduled to be tabled in this House on 30 October.
We tabled a Special Adjustments Appropriation Bill owing to the fact that in this case we unfortunately do not have the option of waiting for the normal adjustments budget. Both the government in general and I as Minister of Finance have been hesitant to introduce more than one adjustments budget a year.
Where we have done this, it was either due to an emergency or a clearly and unambiguously unavoidable situation. While the items that we request additional resources for today cannot be considered a natural or economic emergency, we table this Special Adjustments Appropriation Bill after exploring all options to meet the cash flow requirements in this instance. Not providing this financial support may in some cases cost government more than the amounts requested.
The first of these cases relates to stadiums. We want to ensure the speedy completion of our 2010 Fifa World Cup stadium projects. In the Budget in February this year we announced an amount of R8,4 billion over four years for the 10 stadium upgrade and construction projects.
Today we are pleased to announce that in certain cases construction is proceeding faster than anticipated. For this reason we are requesting that R1,9 billion be brought forward from next year's allocation to the present year.
In addition to faster progress on the projects the additional funds will be used to prefund the procurement of roofing structures, which in some cases involves importing expensive fabricated steel products. Early payment reduces the risks of cost escalation and currency risk. Particularly the Soccer City Stadium project in Johannesburg and the Moses Mabhida Stadium in eTthekwini entail complex roofing structures.
Since we announced the R8,4 billion ceiling on the stadium projects, we've had a number of requests for additional resources. We've been firm in our resolve not to provide additional resources for these projects and we commend those city municipalities for ensuring that we do not exceed the financial limits on all of these projects.
A review of all 10 stadium projects shows that we're on track to meet the deadline set by Fifa. This is again testimony to South Africa's ability to organise and manage large international projects to the highest standards. We wish each of the host cities and local organising committees well in their endeavours to host a memorable tournament.
Hon members, in 2004 government signalled a strategic shift in its approach towards state-owned enterprises and our development finance institutions. We signalled a stronger role for these enterprises and institutions in driving our developmental agenda.
When we took this decision we were mindful of the fact that in some cases our enterprises were not well managed in the past and not well capitalised, and that governance and oversight were sometimes lacking.
In implementing this strategy we've had to work tirelessly in increasing this strategic focus on improving management. Our approach attempted to steer away from the sterile ideological debates about whether the public sector or the private sector was better able to deliver the services to businesses and households. Instead, we've adopted a pragmatic approach that recognised that there were areas where government had to exit from providing the service, but there were also areas where we felt that the public sector could play a positive role in driving investment.
In the Budget in February we announced a number of developments in state- owned enterprises and development finance institutions in which we're working to assess business plans and increase the strategic focus. In particular, we informed Parliament that we were reviewing the business plans and activities of the Pebble Bed Modular Reactor project, Sentech, the Land Bank and Broadband Infraco.
In respect of Sentech we are pleased to announce today that an agreement has been reached on the business plan of Sentech. Government has approved Sentech's role in developing a national wireless network that can be used by a number of enterprises, including private companies, to enhance wireless Internet connectivity both to businesses and households. For this purpose government is providing R500 million as an initial capital investment in the infrastructure of Sentech.
The Land Bank is a key development finance institution, providing access to credit in the agricultural sector. Clearly it's a very topical issue; hence so much time was consumed this afternoon in debating matters relating to land and agriculture. The bank has played a pivotal role for almost a century in the development of commercial agriculture in South Africa. If we are to expand our agricultural industry and, in particular, if we are going to succeed in bringing black farmers into the agricultural supply chain, the Land Bank is going to have to continue to be a key player in this sector.
There have been difficulties, but we must also report progress. Given the progress that we have made, and noting the low level of capital on the balance sheet, it's prudent for government to recommend an injection of R700 million in cash and the provision of R1,5 billion by way of a government guarantee to ensure the sustainable operations of the bank.
I will give this House the assurance that I will continue to work with my colleague the Minister for Agriculture and Land Affairs, but also with the board of the bank to ensure that we can have the desired outcomes.
In respect of the Pebble Bed Modular Reactor, members of this House will be aware that considerable progress has been made in recent years in the design of an entirely new-generation nuclear power plant, know as a PBMR. The construction of the demonstration plant has now begun, for which government has made a financial commitment of R6 billion over three years.
This is a commitment that was made in the Budget Speech in February this year. At the time of the Budget the amount required this year and the details of the business plans had not been finalised. At this stage external funding for the project is not available and an amount of R1,8 billion is therefore required for the period April to December this year.
This amount will allow for the project to fund the ongoing recurrent expenses as well as provide for contractual obligations related to the design components of the demonstration plant.
In respect of Alexkor, I think we all are aware of the government's efforts to exit from diamond mining, but there was a need to resolve the protracted land claim with the Richtersveld community. A deed of settlement was signed on 22 April this year. The settlement constitutes the conclusion of a lengthy court case in which billions of rands were claimed.
There's now a joint venture with the Richtersveld Mining Company, which will become the owner of converted land mining rights that currently belong to Alexkor. Funding of R44,7 million is required for the operational costs and working capital of the mine.
The final item in this special appropriation relates to an indemnity claim in favour of Denel's aerostructure subsidiary. The claim is currently being verified by auditors appointed by the DPE and an amount of R222 million is required as provision against this contingent liability.
In conclusion, in each of these cases it's not possible to wait until the normal adjustments at the end of October. It's not the intention of government to request approval for the appropriation of resources more often than is absolutely necessary. If we could have avoided the need for a special adjustments budget today, we certainly would have done so.
Turning our state-owned enterprises and development finance institutions around so that they can become effective tools in the hands of a developmental state requires huge efforts on all fronts.
I confess that in some cases we've been disappointed with our efforts to focus the activities in a manner that ensures financial stability. We have much more work to do to improve the quality of management and the strategic direction of these enterprises. However, as a shareholder, it is also our obligation to ensure that these entities do not engage in risky financial arrangements that would inevitably cost consumers more in the long term.
It is our obligation to provide funding, after due diligence has been completed, where these funds are required to increase investment or to lower the cost of doing business in South Africa. In total an additional appropriation of R5,195 billion is required for the Departments of Agriculture and Land Affairs, Communications, Sport and Recreation and Public Enterprises.
The anticipated revised total expenditure, and how it is to be financed, will be dealt with as usual in the Medium-Term Budget Policy Statement to be tabled here on 30 October this year. I thank you very much. [Applause.]