S Africa spooked by World Cup cost projections

PRETORIA, Nov 20 (Reuters) South Africa's preparations to host the 2010 soccer World Cup could cost up to 20 per cent more than budgeted due in part to rising steel and cement prices, the country's deputy finance minister said today.

In a briefing in Pretoria, Deputy Minister of Finance Jabu Moleketi said officials in the nine cities due to host World Cup games had delivered cost escalations between 2.8 billion rand (418 million dollars) and 3.4 billion rand above budget. ''These are some of the projections that are coming in,'' he said.

The South African government has budgeted about 17.5 billion rand for the construction and refurbishment of 10 soccer stadiums and other infrastructure for the 2010 championship, the first to be hosted in Africa.

But the prospect of cost overruns has become a growing concern for local organisers of the tournament, with officials warning municipalities and companies not to expect the national treasury to dig into its coffers for a bail-out.

Moleketi said the government planned to question and verify the reasons for the rising costs and would have a clearer idea of the World Cup tab by the time Finance Minister Trevor Manuel presented the country's budget in February 2008.

''We are looking at the (companies') profit margins,'' Moleketi noted while adding there was no evidence firms that won World Cup building contracts were trying to gouge taxpayers.

Companies say rising prices for cement, steel and other key building materials, some of which are in short supply, in addition to higher labour costs are to blame for ballooning costs at construction sites around the country.

LABOUR MUSCLE Inflation in South Africa's booming economy has quickened beyond the central bank's 3 per cent to 6 percent target band, with the annualised rate jumping to 6.7 percent in September and expected to continue rising until early 2008.

Labourers, including thousands working at soccer stadiums, have in turn demanded higher wages and other concessions from employers. World Cup construction sites have been disrupted by a string of strikes in the past month.

Earlier this week, the National Union of Mineworkers called off a stayaway that could have crippled World Cup construction throughout the nation after employers agreed to pay bonuses and improve conditions for workers at the Durban stadium site.

Labour's willingness to flex its muscle has raised fears the country's powerful unions could prevent South Africa from completing the stadiums in time for the month-long tournament, which begins on June 11, 2010.

Moleketi said he was confident unions and workers would not ''sabotage'' the preparations and that South Africa would meet world soccer body FIFA's deadlines for completion of the work.

''We will be ready,'' Moleketi said. ''All these sceptics will eat their words.'' REUTERS RAR BST2011