South Africa looking for potential investors from Asia, specially from India and China, for its projects worth US$ 7.5 billion in Tshwane. These projects involve real estate, solar and thermal power. Recently, a delegation led by Cllr Kgosientso Ramokgopa, the mayor of Tshwane, a province of South Africa, visited Chennai and Mumbai to meet Indian companies. Here are the excerpts of an exclusive interaction of Mr Ramokgopa with Pradeep Pandey....
How do you see the global economic scenario at present and what are the factors that made you to think for seeking investors from India?
As of now, global economic scenario is not so good but we believe that there is always a better scope for developing nations. For example, our city, which is the capital city of Africa and South Africa have the advantage of being the emerging economy of the African continent. We are looking to positioning ourselves as a leading capital city in the continent and the world. We have identified a number of flagship projects and are looking for potential investors. Hence we have identified East Asia as a target region for number of reason. Though there has been a great response from European region, the liquidity position in Asian countries is still healthier as compared to any other economies. Now, what drove us to India in addition to China is the historical political relationship, we enjoy, between ourselves and India. If you trace the footsteps of Mahatma Gandhi, an iconic figure, who also spent a significant portion of his life in South Africa. The culture of the Indians and ours is almost the same. Two...the current political relationship, we enjoy. It is easier for us to have a conversation with potential partners from India and China. We have set high level and good relations that exist between us. And three.... there are lot of Indian multinational companies that already have a footprint such as Tata group has gone there and they have a manufacturing plant, Info systems has its operations in Johannesburg, Mahindra group has its presence in our country.
Are you looking for investments from the companies already present in SA or you are talking with new potential investors?
We are open for all options. Before we came here (Mumbai) we went to Chennai, where we have met dozen of investors and business groups, who have shown initial interest in our projects. There were some new companies who have shown keep interests but it all depends on potential and credibility of the investors. Obviously, the office of the Embassy and High Commissioner and the Consulates assisted and helped us to contact with organised business groups in Mumbai and Chennai.
Which project attracted greater interest? Was there any serious interest by new Indian companies for making investments in SA?
The projects such as solar and renewable energy segment drew enough attention. We are looking for developing solar energy systems and new techniques for improving the performance of our existing power stations, apart from power capacity expansion. So there are companies who already play in that space and in fact improve their mettle here in India and are looking for opportunities outside. I think those are opportunities we are exploring.
Can you name few of them?
Tata group, already have its presence through manufacturing unit. The same group has expressed an interest to develop renewable energy project. Another player Infosys, have expressed an interest in our e-Governance project. There were couples of more players, who have demonstrated an interest to help us to cast a road map on how to become a clean and green city and how to match with green and clean projects.
Which are the potential sectors in which you seek participation by Indian companies?
Real estate and renewable energy are the two potential sectors where Indian companies can invest. At present there are quite a few projects in these two sectors with total value of around US $ 7.5 billion. There are 13 projects all together.
You are saying 13 projects, involving real estate and renewable energy, if you could give us the breakup of investments?
We have two coal power stations in the city and are going to make asset available to private sector to improve their capacity output. The power stations are designed to give us 480 MW of electricity but are for some reasons were unable to provide it. So our prime focus will be to enhance power generation capacity, in which we estimate an initial investment of over US$ 120 million. We may make available our assets for operating and maintenance. When we say that you operate it on this period we will do power purchase agreement.
How about renewable projects?
In solar segment we have target of around 850,000 households who want to install solar water geysers and other household items powered with solar energy. So there is enough scope in this segment too. We have already given rights to a South Korean company to install a capacity of 80 MW.
What will be the proportion of investment in the projects you are looking for and how much will be the return on investments over a period of time?
Anything between 25- 50 per cent of equity investment will be acceptable and we will manage the debt part in any project. RoI could be any were between 19-28 per cent depending upon the projects, in which you have invested.
How long will be the normal gestation period of the projects?
We expect around seven years in real estate and in solar and power segment we see about 12-20 years, as it would evolve power purchase agreement of that duration.
The city of Tshwane, the Capital city of the Republic of South Africa, is the culmination of 13 former local authorities in the greater Pretoria region integrated into one city. The borders of this huge municipal area extend for almost 60 km east to west and 70 km north to south. It includes the following areas: Centurion, Crocodile River, Pretoria, Akasia, Soshanguve, Ga-Rankuwa, Mabopane, Winterveldt, Temba, Hammanskraal, Mamelodi and Atteridgeville. The city of Tshwane falls within Gauteng and encompasses the administrative capital of South Africa, at the Union Buildings. Tshwane has emerged as one of the most successful South African cities in the post democratic era.
The City of Tshwane has a vibrant and diverse economy which enables it to contribute approximately 26.8 per cent of the Gauteng Province's Gross Domestic Product and 9.4 per cent of the national economy. The City's economy is service-based with government and financial services being the most prominent sectors. The manufacturing sector is well developed, with the automotive industry representing the largest share. The city has the highest concentration of automotive original equipment manufacturers in South Africa comprising Ford, Volvo, Nissan, Renault, and BMW and at least 200 component manufacturers which accounts 40 per cent of national exports and employs 35,000 people.
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