Transcript PPPs in South Africa Philippe Burger University of the Free State South Africa.

PPPs in South Africa
Philippe Burger
University of the Free State
South Africa
1
Overview
• A brief history of PPPs and the PPP unit in
South Africa
• The role of the South African dedicated PPP
unit
• The Gautrain project
• Conclusion
2
Intro
• After 1st democratic election in South Africa in
1994: reform of the approach of government
towards the management of state assets.
• Did this in a manner that represent a move
from ‘government to governance.’
• This approach towards state assets is
broader than just privatisation and included
PPPs
3
A brief history of PPPs and the
PPP unit in South Africa
• Apr 1997: Cabinet approved appointment of
interdepartmental task team
• From 1997 to 2000: Six pilot project
– SA National Roads Agency: N3 and N4 toll
roads;
– Department of Public Works and Correctional
Services: Two maximum security prisons;
– Two municipalities: Water services; and
– SA National Parks: Tourism concessions
4
• Framework for PPPs endorsed in Dec 1999
• National Treasury issued PPP regulations
Apr 2000.
• Mid 2000: PPP unit established in Nat
Treasury.
5
• Legislative framework:
– National and provincial PPPs: Treasury
Regulation 16, issued 2004 to PFMA
(1999).
– National Treasury PPP Practice Notes that
constitute the PPP manual of the PPP unit
– Municipal PPPs: Municipal Public-Private
Partnership Regulations, issued 2005 to
Municipal Finance Management Act (2003)
6
• Since 1997 average of 2 PPPs per annum
• Between Mar 2000 and Sept 2006: 13
projects signed
• Acceleration in the number of projects
signed:
• Between Oct 2006 and Oct 2007: 5 more
signed – thus, total of 18 signed
• Relatively slow roll out due to lack of skilled
staff capacity in individual departments and
provinces
7
• A significant proportion of projects never
reached the contract signing stage and
were deregistered.
• Main reason:
– Not so much that proposed projects failed the
tests of affordability, VFM or insufficient risk
transfer,
– Rather the absence of capacity in
departments and provinces.
• Issue is addressed by PPP unit as can be
seen by the higher roll-out of projects
since 2006/7
8
• Projects in the pipeline at end of October
2007:
– 16 in national government departments
– 17 in the provinces
– 8 in public entities
– 14 in municipalities
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Project
1. Fleet Management
2. Inkosi Albert
Luthuli Hospital
3. Eco-tourism
4. Universitas and
Pelonomi Hospitals
Government institution
Northern Cape Dept of
Transport, Roads and Public
Works
KwaZulu-Natal Dept of Health
PPP type
DFO
Duration
5 years
Nov 01
DFBOT
Manyeleti 3 sites Limpopo Dept
of Finance, Economic Affairs,
Tourism
Co-location Free State Dept of
Health
DFBOT
15 years
Dec 01
30 years
Dec 01
DFBOT
16,5
years Nov
02
5. Information Systems Dept of Labour
DFBOT
10 years
Dec 02
6. Chapman’s Peak
Western Cape Dept of Transport DF(part)BOT 30 years
May 03
Drive
7. State Vaccine
Dept of Health
Equity
4 years
partnership
April 03
Institute
8. Humansdorp District Eastern Cape Dept of Health
DFBOT
20 years
Jun 03
Hospital
9. Fleet Management
Eastern Capt Dept of Transport DFO
5 years
Aug 03
10
Project
10. Head Office
Accommodation
11. Cradle of
Humankind
Interpretation Centre
Complex
12. Social Grant
Payment System
13. Gautrain Rapid
Rail Link
14. Fleet Management
15. Western Cape
Rehabilitation Centre
& Lentegeur Hospital
16. Polokwane Hospital
Renal Dialysis
17. Dept of Health
Head office
environment
18. Port Alfred and
Settlers Hospital
Government institution
Dept of Trade and Industry
PPP type
DFBOT
Gauteng Dept of Agriculture,
Conservation, Environment and
Land Affairs
DBOT
Free State Dept of Social
Development
Gauteng Dept of Public
Transport, Roads and Works
Dept of Transport
DFO
Western Cape Dept of Health
Facilities
management
Limpopo Dept of Health
DBOT
Dept of Health
DBOT
Eastern Cape Dept of Health
DBFOT
DBFOT
DFO
Duration
25 years
Aug 03
10 years
Aug 03
3 years
Apr 04
20 years
Sept 06
5 years
Sept 06
No info
Nov 06
10 years
Dec 06
27 years
Apr 07
17 years
May 07
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• In SA the Net Present Value (NPV) of benefits to
government for 6 of the 11 projects for which this
data is available, is lower than R100 mil (roughly
Euro 1 = R11).
• Larger projects include:
– Gautrain project: capital value of R23.09 billion
– Chapman’s Peak Drive toll road: NPV equals R450
mil,
– The latest fleet management project of the
Department of Transport: NPV equals R919 mil.
– Department of Education Head Office: capital value of
R513 mil
• 11 of the projects have a unitary charge. The
NPV to government range between R18.9 mil to
R4.5 bil (only 2 have a value > R1 billion).
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Table X.2 – PPP and other infrastructure expenditure (2007)
2003/4
2004/5
2005/6
2006/7
2007/8
2008/9
2009/10
Revised
estimate Medium-term estimates
4923
5783
6908
7766
R million
National
4005
4566
4936
departments
Provincial
18729
19955
22535
26591
35383
41561
departments
Municipalities 16529
16865
21084
23441
28214
32413
Public-private 1552
1106
728
3444
3458
5197
partnerships
Extra3053
3470
3144
4262
5298
5608
budgetary
public entities
General
43868
45962
52427
62661
78136
91687
government
Non-financial
21375
22145
26424
38322
44681
50324
enterprises
Total
65243
68107
78851
100983
122817 142011
Total as % of
5.1
4.8
5
5.8
6.3
6.6
GDP
GDP
1288952 1430673 1580119 1755340 1938934 2141747
PPP as % of
3.5
2.4
1.4
5.5
4.4
5.7
Gen gov
Source: National Treasury 2007 (Budget Review 2007/8): Table 3.2, pp 45.
42203
33537
4160
6385
94051
56929
150980
6.4
2379299
4.4
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The role of the South African
dedicated PPP unit
• Main functions: Ensure affordability, VFM and
sufficient risk transfer
• In line with international best practice:
– Main drivers of VFM: risk transfer and
competition
– Prerequisite for VFM is affordability
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• PPP unit in Nat Treasury has two broad tasks:
– Provide technical assistance to government
departments, provinces and municipalities
– Provide Treasury Approvals during precontract phases
• The life cycle comprises six phases:
1) Inception; 2) Feasibility study;
3) Procurement; 4) Development;
5) Delivery and 6) Exit
• Treasury Approvals: I, IIA,IIB and III
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•
•
Feasibility study must pass three regulatory
tests: affordability, VFM and risk transfer.
Value assessment
–
•
Bidding process
–
•
Dept must demonstrate why preferred bidder fulfils
criteria of affordability, VFM and risk transfer
Competition in bidding key element to ensures
VFM
–
•
Base and risk-adjusted PSC & PPP reference
model
If only one bidder: Competes with PSC
Contract meets criteria of affordability, VFM
and substantial risk transfer
16
• Management of agreement, once signed,
rests with individual department or
province
– Not the responsibility of PPP unit
– PPP unit still provides technical
assistance
• Length of the pre-contract period is
roughly 8-18 months (Gautrain one
significant exception)
• Environmental approvals
17
• Future challenges
• Pace at which contracts are concluded
– Capacity constraints
– Contract managers
• Capacity, mechanisms and procedures of department is
receiving attention; pace accelerated
• Health, education and infrastructure development
– Initiative to setup such projects (less ad hoc)
• Provincial dedicated PPP units
– Provincial units mainly to provide Treasury Approvals;
National unit provides technical assistance
18
The Gautrain
• The Gautrain is a high-speed train in the
Gauteng province (Johannesburg/Pretoria area)
• The Gautrain project is the largest infrastructure
deal in Africa
• Planning commenced in 2000
• 7 Dec 2005 cabinet approved project
• May 2006: Initial work commenced
• 28 Sept 2006: signing of the Concession
Agreement between the Gauteng Provincial
Government and the Bombela Concession
Company; construction commenced
19
• Project to be completed in 2010/11
• Initial cost estimates: R3.5 - 4 billion in
2000
• Current capital value estimate: R23.09
billion
• Government contributes 87% of capital,
another 11% comes from debt issue and a
further 2% comes from equity.
• Environmental impact studies took time
and caused some delays compared to
initial envisaged roll-out plans
20
• Bombela concessionaire (50% foreign
owned/50% local owned):
– Bombardier 25%
– Bouygues 25%
– Murray & Roberts 25%
– Strategic Partnership Group 25%
• RATPDéveloppement will operate and
maintain it
21
• Government expects Gautrain to cut the number
of cars on the N1 (Ben Schoeman) highway
– Currently > 157 000 vehicles per day (traffic growth:
7% per year).
– Currently 300 000 cars per week day in PretoriaJohannesburg traffic corridor
• 20% cut number of road commuters expected
• Gautrain will also attract airport passengers on
the link to OR Tambo International Airport
• Forecasts: Initially 100 000 passengers per day.
Expected annual growth: 4.8% with more than
120 000 passengers per day by 2010.
22
• Length of network: 77 kilometers
• 10 stations, 3 underground
• Connected to other public transport (taxis,
buses and trains)
• Gautrain consists of 24 trains, departing
every 12 minutes, with a maximum speed
of 160km/h (42 minutes to travel from
Johannesburg to Pretoria)
• Each train is made up with four linked cars
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• Stages of completing construction:
– The Sandton to OR Tambo International
Airport & link between Sandton and Midrand
in 45 months, in time for the Soccer World
Cup in 2010.
– Remaining 5 stations (links between Sandton
to Johannesburg Park Station and Midrand to
Hatfield) in 54 months, by 1 March 2011.
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Conclusion
• SA has come a long way in implementing PPPs,
though the scale is still small.
• The PPP unit approves PPP agreements and
renders technical assistance in creation and
maintenance of PPPs.
– It has been successful in ensuring that potential PPP
comply with affordability and VFM requirements.
– It now also succeeds in accelerating the pace at
which PPPs are created
• Gautrain: The largest PPP to date in SA (still in
construction phase)
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