PPPs promoting public works
South African cities are crying out for infrastructure development as people migrate to cities seeking work. With government budgets under pressure, the only way to make real pro - gress is involving the private sector in mutually beneficial projects through public-private partnerships (PPPs).
Byron la Hoe, communication officer for the Western Cape department of transport and public works, says some major projects involving PPPs are currently underway.
“There is a R186-million department of transport and public works project to rehabilitate a 7km por- tion of the N2 between Borcherds Quarry Road and the R300, and to add a third lane in both directions,” says la Hoe. “Work is expected to be completed by mid-2017.
“The upgrade will improve the carrying capacity of the road, especially for buses and taxis in peak periods. The ride quality of the road will be improved and better street lighting will be installed. The project includes piling and earthworks to prepare for the future construction of a bridge and interchange from Eisleben Road onto the N2. Aligning the N2 and Borchards Quarry i ntersection with Eisleben Road means better access to the important Philippi industrial area.”
Projects in progress in terms of mixed-use development are the Alfred Street Complex, Helen Bowden Nurses Home, Top Yard and Main Road i n Sea Point. However, these are not without opposition; objections i nclude that state land should be an asset to hold onto, and used for the common good. Objectors say that these sales of prime land are to the private sector, and that these sites should rather be used for affordable housing for commuters who currently travel long distances.
“The provision of suitable facilities for provincial departments is c l e a r l y a n i mpo r t a n t step in the process of service delivery, particularly where the shift can be made from leased to owned accommodation. This is confirmed by the austerity measures being applied through national government,” says La Hoe.
“A PPP is an alternate method of procureme n t , w h i c h is supported by the national treasury in terms of the treasury’s regulations of the Public Finance Management Act,” says La Hoe. “A PPP process requires considering the standard method of delivery versus that of delivery through the private sector. In other words, government having enough money upfront to design, build and operate the facility taking into account the lifecycle maintenance, versus the private sector delivering the facility and government paying a fee over a specific time period to the private sector, before operation and management of the facility reverts to the department.
“The condition of the facility at this point must equate to its original state. The i ntention of pursuing a possible PPP on the Dorp Street block is to enable the provincial government to consolidate the Western Cape education department offices and ensure that after a period of time, they are l ocated i n owned accommodation.
“It is generally more efficient and costeffective for provincial government to locate departments in owned accommodation. Usually the requirement exists in such PPP projects to provide a capital contribution and then pay an annual unitary fee, which fee is dependent on the amount provided, with the higher the capital contribution, the lower the fee. The department of transport and public works has been aiming to balance the annual fee with the current lease commitment in order to satisfy affordability criteria,” concludes La Hoe.