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PPP in Practice

PPP in Practice. CASE STUDY : BAKWENA by Leo Rohrig CEO Bakwena Platinum Corridor Concessionaire (Pty ) Ltd. SOUTH AFRICAN ROADS. Total road network: 536,000 km National roads : 10,000 km Tolled roads : 2,421 km PPP concessions : 1,220 km. Toll Road Concessions.

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PPP in Practice

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  1. PPP in Practice CASE STUDY : BAKWENA by Leo Rohrig CEO Bakwena Platinum Corridor Concessionaire (Pty ) Ltd PPP IN PRACTICE 20051124

  2. SOUTH AFRICAN ROADS Total road network: 536,000 km National roads : 10,000 km Tolled roads : 2,421 km PPP concessions : 1,220 km PPP IN PRACTICE 20051124

  3. Toll Road Concessions PPP IN PRACTICE 20051124

  4. Concessions = PPP Implementing Authority : public sector Developer & Funders : private sector Road concession = BOT Design, Construction, Financing, Operation, Maintenance, Upgrade and Traffic Risk accepted by the Concessionaire PPP IN PRACTICE 20051124

  5. PUBLICSECTOR CONTRACTING HIGH PPP PRIVATISATION LOW PRIVATE SECTOR HIGH LOW PPP: Transfer of Risks, Rights & Obligations PPP IN PRACTICE 20051124

  6. Bakwena : Development Stages • Prequalification Request 1997 • Tender 1998 • Best And Final Offer 1999 • Preferred Bidder Nov 1999 • Contract signed Oct 2000 • Effective Date Aug 2001 - all at developers risk – PPP IN PRACTICE 20051124

  7. Relationship Criteria Public < > Private sector interaction is critical in both phases : Project Development & Execution Test : Commitment Capacity Attitude PPP IN PRACTICE 20051124

  8. Commitment • To go ahead -Timeously • To remove obstacles • To underwrite the need for PPPs • Full political support, inclusive and beyond the Implementing Authority. • Risk acceptance commits the private sector. PPP IN PRACTICE 20051124

  9. Commitment • Remove obstacles • i.e abuse of environmental legislation by objectors • Transparency of government funding • Propagate need for PPPs – service delivery PPP IN PRACTICE 20051124

  10. CHALLENGES TO BE MET • Environmental approval process • Anti Project campaigns • Demonstrations and Obstructions • Impact on Timing and Resources PPP IN PRACTICE 20051124

  11. ENVIRONMENTAL EXPERIENCE • Ensure : there are no genuine green issues • Expose hidden commercial agenda • Meticulous process compliance • Involve public, record all I&AP contacts PPP IN PRACTICE 20051124

  12. ANTI-PROJECT CAMPAIGNS • FLYERS & PAMPHLETS • PROTEST MEETINGS • DISRUPTIONS OF INFO MEETINGS • MEDIA MOBILISATION Common Characteristic : FEW FACTS – PLENTY EMOTION PPP IN PRACTICE 20051124

  13. ANTI-PROJECT : RESPONSE • Accept : concessions are quite complex Funding, Financing, Design, Construct, Operate, Maintain & Upgrade • Dissect into comprehensible components • Conduct info meeting • Embark on step-by-step information campaign Be patient and transparent PPP IN PRACTICE 20051124

  14. DEMONSTRATIONS & OBSTRUCTIONS Avoid confrontation Remain available to media Objective = make them ‘non-events’ Defuse : Introductory special offers PPP IN PRACTICE 20051124

  15. N1 Pretoria10km N1 Pretoria10km OUR CHOICE PPP IN PRACTICE 20051124

  16. Capacity PPP deals are very complex and have technical, legal, commercial, financial, environmental components Competency of the parties : Previous in-house experience Access to external resources Legislative framework PPP IN PRACTICE 20051124

  17. Attitude Traditional : IA = client Private Partner = contractor who, for the privilege of a profit opportunity has to solve all problems. Partnership is sharing Fairly ! PPP IN PRACTICE 20051124

  18. RISK ALLOCATION PPP IN PRACTICE 20051124

  19. Participation of PDEs Equity : ( Minority ) Shareholding Limitations: Access to funds Project : Joint Ventures Sub Contracts Direct Assistance to SMMEs Employment creation PPP IN PRACTICE 20051124

  20. Socio-economic Upliftment Training & Capacity Building: Skills transfer & Mentorship Bursaries & Scholarships Economic Growth Promotion : Community Participation Development Fund PPP IN PRACTICE 20051124

  21. Way Forward Many schemes will need increased government participation to lever private sector input Facilitate Deal-Flow : Money won’t wait forever Advance the PPP process • Efficient service delivery • Provide employment • Free government funds • Retain resources and expertise • PPP does deliver PPP IN PRACTICE 20051124

  22. The PPP Delivery • Construct / upgrade 1300 km National Road • Private Sector Funding : R 9 billions • Average Daily Traffic 230000 vehicles • + 10 % Heavies • 15 Mainline & 14 Ramp Plazas : 223 lanes • Electronic Toll Collection introduced • Enhanced road safety : SOS & IMS • 13300 new jobs created > multiplier effect 6 • R 108 mio for community upliftment PPP IN PRACTICE 20051124

  23. The End PPP IN PRACTICE 20051124

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