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South Africa’s Municipal Infrastructure Investment Unit

South Africa’s Municipal Infrastructure Investment Unit. Operations, Budget & Future Direction Ms. Gugu Moloi MIIU CEO. Operational Overview. The MIIU. A government intervention to: Facilitate private sector investment in municipal services – on a controlled, sustainable basis

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South Africa’s Municipal Infrastructure Investment Unit

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  1. South Africa’sMunicipal Infrastructure Investment Unit Operations, Budget & Future Direction Ms. Gugu Moloi MIIU CEO

  2. Operational Overview

  3. The MIIU A government intervention to: • Facilitate private sector investment in municipal services – on a controlled, sustainable basis • Help create a market in MSP services to provide advice to local governments

  4. The Project Preparation Unit:How Does it Operate? • Municipality applies for MIIU aid • Questionnaire helps conceptualise project • MIIU assesses chances for success & development impacts • Formal grant agreement signed • Municipality contributes partial funding • MIIU provides quality control

  5. The Project Development Process • Assessfeasibilityof MSP options • Council decision on option (with MIIU advice) • Prepare bid documents, draft contract • Selection of public or private partner • Negotiate & sign contract • Financial close -- begin implementation • Initiate contract compliance monitoring

  6. Completed MSPs:Total Values ContractsValues • O&M R 142 m • O&M plus Capex R 4,575 m • Divestiture R 414 m • Corporatisation R 50 m ---------- Total R 5,181m

  7. Benefits for the Disadvantaged:Direct Benefits to Households: Project Households • Harrismith water 14,222 • Thabazimbi waste 3,000 • Nelspruit water 42,667 • Tzaneen waste 12,000 • Jnb Metro Gas 6,000 • Jnb Bus 355,556 Total 433,445

  8. Benefits for the Disadvantaged:Indirect Service Efficiencies: • Jnb Info Tech • Dolphin Coast water • Nelspruit water • Jnb Fleet • Jnb Market • Jnb bus • Eastern Cape IT

  9. Benefits for the Disadvantaged:Environmental Improvement: • Thabazimbi waste • Robertson waste • WMLC waste • Nelspruit water • Dolphin Coast water • Tzaneen waste • Jnb Metro Gas

  10. Benefits for the Disadvantaged:More Revenue for Services to Poor: • Jnb Metro Gas • Jnb Rand airport • Richards Bay airport • Pretoria airport • Nelspruit water • Dolphin Coast water • Jnb Parking

  11. Budget Overview

  12. Budget Structure 1. Revenues (DPLG capital, MTEF, donors, interest income)

  13. Budget Structure 1. Revenues (DPLG capital, MTEF, donors, interest income) minus 2. Administrative Expenditures (BOD expenses, DBSA mgmt fee, office admin.)

  14. Budget Structure 1. Revenues (DPLG capital, MTEF, donors, interest income) minus 2. Administrative Expenditures (BOD expenses, DBSA mgmt fee, office admin.) minus 3. Project Expenditures (costs of investigating & preparing MSP projects)

  15. MIIU Budget 1998-2000 Goals: • Establish MIIU pipeline, begin disbursements • Establish financial mgmt, reporting, auditing procedures & policies • Complete MPPP projects • Acquire & allocate USAID funding to projects

  16. MIIU Budget 1998-2000 Revenues: 98-99 MPPP transfer 10,690 DCD capital 12,000 MTEF allocation 0 USAID grant 0 Interest 2,806 Padco reimburse 0 TOTAL 25,496

  17. MIIU Budget 1998-2000 Revenues: 98-9999-00 MPPP transfer 10,6900 DCD capital 12,0008,000 MTEF allocation 00 USAID grant 05,400 Interest 2,8062,744 Padco reimburse 0 0 TOTAL 25,49616,144

  18. MIIU Budget 1998-2000 Revenues: 98-9999-0000-01 MPPP transfer 10,69000 DCD capital 12,0008,0000 MTEF allocation 0 04,006 USAID grant 05,4002,400 Interest 2,8062,7442,745 Padco reimburse 0 0 141 TOTAL 25,49616,1449,292

  19. MIIU Budget 1998-2000 Admin Expend.: 98-99 BOD expenses 13 DBSA admin fee 1,542 General admin 307 TOTAL 1,862

  20. MIIU Budget 1998-2000 Admin Expend.: 98-9999-00 BOD expenses 1326 DBSA admin fee 1,5421,053 General admin 307 475 TOTAL 1,8621,554

  21. MIIU Budget 1998-2000 Admin Expend.: 98-9999-0000-01 BOD expenses 1326 26 DBSA admin fee 1,5421,0531,435 General admin 307 475 556 TOTAL 1,8621,5542,017

  22. MIIU Budget 1998-2000 Project Expend.: 98-99 MPPP projects 6,712 MIIU pipeline 1,619 TOTAL 8,331

  23. MIIU Budget 1998-2000 Project Expend.: 98-9999-00 MPPP projects 6,7121,135 MIIU pipeline 1,6195,887 TOTAL 8,3317,022

  24. MIIU Budget 1998-2000 Project Expend.:98-9999-0000-01 MPPP projects 6,7121,135360 MIIU pipeline 1,6195,88715,023 TOTAL 8,3317,02215,383

  25. MIIU Budget 1998-2000 Summary:98-9999-0000-01 Revenues 25,496 16,144 9,292

  26. MIIU Budget 1998-2000 Summary:98-9999-0000-01 Revenues 25,496 16,144 9,292 Admin. Expend. 1,862 1,554 2,017 Project Expend. 8,331 7,022 15,383

  27. MIIU Budget 1998-2000 Summary: 98-9999-0000-01 Revenues 25,496 16,144 9,292 Admin. Expend. 1,8621,5542,017 Project Expend. 8,3317,022 15,383 Surplus/shortfall 15,30322,871 TOTAL 15,303 22,871 14,763

  28. MIIU Budget 2001-2004 Goals: • Maintain MIIU pipeline, accelerate disbursements • Confirm MTEF funding • Find new donor funding • New activities: interns, success fees, etc. • Target disbursements by category

  29. MIIU Budget 2001-2004 Revenues: 01-02 MTEF allocation 7,000 Interest 2,250 Padco reimburse 90 Success fees1,425 Donor grant 0 TOTAL 10,765

  30. MIIU Budget 2001-2004 Revenues:01-0202-03 MTEF allocation 7,0007,000 Interest 2,250500 Padco reimburse 9090 Success fees1,4252,000 Donor grant 015,000 TOTAL 10,76524,590

  31. MIIU Budget 2001-2004 Revenues:01-0202-0303-04 MTEF allocation 7,000 7,0007,000 Interest 2,250 500200 Padco reimburse 90 9090 Success fees1,425 2,0001,675 Donor grant 015,000 0 TOTAL 10,765 24,5908,965

  32. MIIU Budget 2001-2004 Admin Expend.:01-02 BOD expenses 28 DBSA admin fee 1,579 General admin 1,768 TOTAL 3,375

  33. MIIU Budget 2001-2004 Admin Expend.: 01-0202-03 BOD expenses 2831 DBSA admin fee 1,5791,735 General admin 1,7682,293 TOTAL 3,3754,059

  34. MIIU Budget 2001-2004 Admin Expend.: 01-0202-0303-04 BOD expenses 283134 DBSA admin fee 1,5791,7351,900 General admin 1,7682,2932,508 TOTAL 3,3754,0594,443

  35. MIIU Budget 2001-2004 Project Expend.: 01-02 MIIU pipeline 19,025

  36. MIIU Budget 2001-2004 Project Expend.: 01-02 MIIU pipeline 19,025 Concessions 29% Metros 26% Dist. councils 25% Other local councils 20%

  37. MIIU Budget 2001-2004 Project Expend.: 01-0202-03 MIIU pipeline 19,025 17,550 Concessions29% 29% Metros26% 12% Dist. councils25% 47% Other local councils20% 12%

  38. MIIU Budget 2001-2004 Project Expend.: 01-0202-0303-04 MIIU pipeline 19,025 17,550 8,500 Concessions29% 29%34% Metros26% 12%0 Dist. councils25% 47% 53% Other local councils20% 12% 13%

  39. MIIU Budget 2001-2004 Summary: 01-0202-0303-04 Revenues 10,765 24,590 8,965

  40. MIIU Budget 2001-2004 Summary: 01-0202-0303-04 Revenues 10,765 24,590 8,965 Admin. Expend. 3,375 4,059 4,443 Project Expend. 19,025 17,550 8,500

  41. MIIU Budget 2001-2004 Summary: 01-0202-0303-04 Revenues 10,765 24,590 8,965 Admin. Expend. 3,3754,0594,443 Project Expend. 19,025 17,550 8,500 Surplus/shortfall 14,7633,1286,109 TOTAL 3,128 6,109 2,131

  42. MIIU Budget 1998-2004 Conclusions: • Steady pipeline growth • Strong, early capitalisation created financial foundation • Importance of consistent MTEF allocations • Critical need for new donor funding • Administrative costs rise as technical transfer begins, offset by success fees

  43. Lessons Learned &Future Direction

  44. Lessons Learned – toward a comprehensive strategy • Need for private investment to supplement govt infrastructure finance • PPPs vs. bonds vs. grants – needed linkages • Measuring/monitoring govt performance • Sustaining MIIU’s value to local govt: -- internships & more local staff -- success fees & revolving fund -- exit strategy & succession planning

  45. MIIU into the Future:MSPs after Demarcation The Municipal Reform Challenge • Developmental local governance • Financial sustainability • Service delivery for all • Coping with a changing environment

  46. Municipal Reform Strategy • Planning - IDPs, action plans • Restructuring - Utilities, agencies, PPPs • Performance Management - Performance-based contracting • Capacity Development - Learning to supervise, not implement

  47. Restructuring • Budget Analysis - Match actual revenues & costs • Organisational Redesign - Match structure & function • Partnerships - Assess partnership options - Find public & private partners

  48. The MIIU Role in Reform • Discuss reform strategies in IDPs • Brief clients on reform requirements • Inform clients re other support programmes • Ensure MSPs fit restructuring needs • Thorough feasibility investigations • Consider all options • Use performance-based contracts

  49. Strategic Issues 1.Free Water policy • Linkages between the three spheres of government • Monitoring of municipal infrastructure investments • Financial support to the unit to increase impact and capacitate local governance

  50. Strategic Issues - cont. 2. Implementation of applicable legislation: • The Municipal Systems Act • The Municipal Structures Act • Pending regulations 3. Communication about MSPs (private and public) 4. Linkages with strategic programmes of govt • Integrated rural strategy • Urban renewal programme

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