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South Africa's World Cup Bill Climbs as Costs Mount (Update1)
By Mike Cohen
Feb. 20 (Bloomberg) -- South African Finance Minister Trevor Manuel allocated an additional 3.2 billion rand ($405 million) to stadiums and transportation for the 2010 soccer World Cup as building costs mounted.
The government had previously allocated 19.4 billion rand to build and upgrade stadiums and improve road, rail and air links to host the world's most watched sporting event.
``That was the best estimate at the time,'' Malcolm Simpson, a deputy director-general at the National Treasury, said in Cape Town today before release of the budget. ``A significant amount of the costs were provisional'' and have risen since construction contracts were concluded in 2006.
On Nov. 20, Deputy Finance Minister Jabu Moleketi said initial estimates showed the budget for the stadiums and transportation systems may be exceeded by between 2.8 billion rand and 3.4 billion rand. Strikes at several stadiums have delayed construction and pushed up costs, while steel and cement prices have risen.
Manuel also allocated an additional 684 million rand to nine host cities to supplement their operating budgets for the World Cup and the Confederations Cup soccer tournament, scheduled for next year. A further 300 million rand will be spent on communications and technology infrastructure for the event.
South Africa won the right to host the 32-nation tournament in 2004 over Morocco and Egypt, becoming the first African nation to organize the event.
The government is building five new stadiums, renovating five others and building roads and a high-speed rail-link for the tournament, which is expected to attract 3.2 million visitors. The budget for the stadiums now stands at 9.6 billion rand.
In his budget speech last year, Manuel rejected pleas by municipalities to provide more funding for the stadiums, saying they had to curb spending or raise the cash themselves.
Murray & Roberts Holdings Ltd., Wilson Bayly Holmes-Ovcon Ltd. and Group Five Ltd. are among the South African construction companies that have won contracts to build the stadiums.
To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net
Last Updated: February 20, 2008 11:55 EST
By Mike Cohen
Feb. 20 (Bloomberg) -- South African Finance Minister Trevor Manuel allocated an additional 3.2 billion rand ($405 million) to stadiums and transportation for the 2010 soccer World Cup as building costs mounted.
The government had previously allocated 19.4 billion rand to build and upgrade stadiums and improve road, rail and air links to host the world's most watched sporting event.
``That was the best estimate at the time,'' Malcolm Simpson, a deputy director-general at the National Treasury, said in Cape Town today before release of the budget. ``A significant amount of the costs were provisional'' and have risen since construction contracts were concluded in 2006.
On Nov. 20, Deputy Finance Minister Jabu Moleketi said initial estimates showed the budget for the stadiums and transportation systems may be exceeded by between 2.8 billion rand and 3.4 billion rand. Strikes at several stadiums have delayed construction and pushed up costs, while steel and cement prices have risen.
Manuel also allocated an additional 684 million rand to nine host cities to supplement their operating budgets for the World Cup and the Confederations Cup soccer tournament, scheduled for next year. A further 300 million rand will be spent on communications and technology infrastructure for the event.
South Africa won the right to host the 32-nation tournament in 2004 over Morocco and Egypt, becoming the first African nation to organize the event.
The government is building five new stadiums, renovating five others and building roads and a high-speed rail-link for the tournament, which is expected to attract 3.2 million visitors. The budget for the stadiums now stands at 9.6 billion rand.
In his budget speech last year, Manuel rejected pleas by municipalities to provide more funding for the stadiums, saying they had to curb spending or raise the cash themselves.
Murray & Roberts Holdings Ltd., Wilson Bayly Holmes-Ovcon Ltd. and Group Five Ltd. are among the South African construction companies that have won contracts to build the stadiums.
To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net
Last Updated: February 20, 2008 11:55 EST