August 13, 2008 / 12:40 PM / 10 years ago

South Africa World Cup costs above budget

JOHANNESBURG (Reuters) - South Africa’s preparations for hosting the 2010 World Cup will cost more than 2 billion rand (136 million pounds) more than budgeted because of global economic trends, the deputy finance minister said on Wednesday.

Hawkers pack up after a day's trading beneath the backdrop of Cape Town's Green Point stadium August 10, 2008. The stadium is under construction for use during the 2010 FIFA Soccer World Cup. REUTERS/Mike Hutchings

“We are talking about something that is north of 2 billion rand as we speak. That is the figure,” Jabu Moleketi told reporters.

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

But an additional 2 billion rand was allocated in February.

Inflation was one of the factors driving up costs, said Moleketi.

“There are a lot of pressures on the fiscus. We are finding mechanisms of ensuring that there isn’t just a dependence on the fiscus,” he said.

The prospect of cost overruns has become a growing concern for local organisers of the tournament. Officials have warned municipalities and companies not to expect the national treasury to dig into its coffers for a bail-out.

Companies have said rising prices for cement, steel and other key building materials, in addition to higher labour costs, are to blame for ballooning costs at construction sites around the country.

Reporting by Phakamisa Ndzamela

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