Government has set aside a broad contingency fund of R3 billion, some of which will go towards funding Infraco, as soon as certain issues are wrapped up.
Finance Minister Trevor Manuel today presented the country's budget to Parliament and said he has set aside R3 billion as a contingency reserve for the new financial year. Some of this amount will be shared out between Sentech, Infraco, SA's nuclear plant, the Pebble Bed Modular Reactor and the settlement of a land claim relating to the Alexkor mine.
"The budget framework includes a contingency reserve of R3 billion for 2007/8. This allows for unforeseeable and unavoidable expenditure that may need to be accommodated in the adjustments budget this year, and allocations to several state-owned enterprises that are not yet finalized," Manuel said.
However, future allocations are contingent on a few outstanding conditions, including "resolution of outstanding regulatory requirements". A National Treasury official explains the Department of Communications (DOC) and the Department of Public Enterprises (DPE) must coordinate SA's ICT infrastructure to ensure there are no duplications of initiatives before money will be released.
As a result, no definite allocation has been set-aside for the State enterprise now referred to as Broadband Infraco in the DPE's budget vote, which is contained in Treasury's Estimates of National Expenditure.
International investment
Infraco will be 74% held by government and 26% held by Neotel shareholder VSNL, which is an Indian company that provides international long-distance services. In Treasury's national expenditure estimates, government says this is because of VSNL's "operational experience in international marine cable connectivity".
Infraco is expected to provide a full service network for national long distance connectivity, as well as international connectivity based on Eskom and Transnet's fibre optic backbone.
"When established, Broadband InfraCo will be responsible for the design, deployment and operation of the national backbone, as well as the international submarine cable connectivity infrastructure," says the Estimates of National Expenditure document.
Infraco will implement long-distance backbone broadband capacities between metropolitan centres, while Neotel will focus on distribution networks within the metropolitan areas, deploying metropolitan area networks and last mile infrastructure.
The newcomer to the telecommunications scene is expected to have upgraded to a 10 Gbit/s dense wavelength division multiplexing platform and establish international connectivity by October this year. Public enterprises minister Alec Erwin recently announced that the company would be incorporated next month.
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