PUBLIC PRIVATE PARTNERSHIP IN CITIES REGENERATION DRIVE

BY

NOËL CHALAMANDA.

Introduction.

• Governments have a social and political responsibility of providing basic services to its nation and citizens.

• Financial constraints affect this responsibility.

• City Councils are mandated to look into infrastructure development and service deliver within their jurisdiction.

• There is a dearth of infrastructure and systems failure in essential service delivery.

Introduction…

• Our cities are riddled with

• Poor road infrastructure.

• Rugged pavement or no pavements, no street lights.

• Ineffective emergency services.

• Poor waste collection or disposal management.

• Lack of public facilities like amusement parks, car parks,

• Lack of office and lodging space etc.

Introduction…

• budget deficits and the inefficient management of large infrastructure projects and delivery of services within the public sector are endemic.

• the resources available to governments are routinely squandered without accountability

• cost of projects to attend to the problems and the traditional procurement method of governments funding infrastructure projects through fiscal budgets is increasingly considered unviable.

PPPS EMERGENCE

• HENCE PUBLIC-PRIVATE PARTNERSHIP

PPPs Emergence

• There is a rise of PPPs in developing economies as a means of crowding in investment and expertise from the private sector

• Urbanization and fiscal decentralization have shifted much of the responsibility for infrastructure and utility investment to local governments

• Conceptually, PPPs are an instrument to respond to market failures while minimizing public sector short-comings as a service provider

PPPs Emergence

• Countries most successful in attracting finance from the private sector have established prioritized programs of investment opportunities

• political support, a proper legal and regulatory structure, a procurement framework that can be understood by both procurers and bidders, and a credible project timetable are an essential part of successful PPP.

What is a PPP

• An agreement between two or more entities to go into business or invest.• An activity undertaken by government and business to provide public services

that either entity finds impossible or less economical to perform on its own.• A PPP arrange a trade-off between the participants in order to pool resources

and certain abilities in a development project that the partners could not have carried out alone.

• “a contract in which a Contracting Authority partners with a Partner to build, expand, improve, or develop infrastructure or service in which the Contracting Authority and private sector partner contribute one or more of know-how, financial support, facilities, logistical support, operational management, investment or other input required for the successful deployment of a product or service, and for which the private sector partner is compensated in accordance with a pre-agreed plan, typically in relation to the risk assumed and the value of the result to be achieved” – PPA

GENERAL OBJECTIVES

• To provide for partnerships between the public sector and private sector for the supply of infrastructure and delivery of services as means of contributing towards sustaining economic growth, social development and infrastructure development;

• To provide for the development and implementation of public private partnership arrangements for the delivery of infrastructure and services;

• To provide for private sector participation in state-owned enterprises, commercial entities and commercial assets.

OBJECTIVES AS PER THE PPPA

PPPAs aim to • Deliver public infrastructure and therefore access to services ;• Give better value for procurement of infrastructure and public

expenditure by the Government through efficient and optimal risk identification and transfer to the private sector;

• leverage on private sector financing, management, technical know-how and technological innovation for delivery of efficient and affordable infrastructure and services;

• to encourage participation by resource owners in public private partnerships and provide assurance for private interests in those partnerships;

OBJECTIVES …

• to encourage competitive and efficient markets for the provision of infrastructure and services.

• minimize the fiscal burden of providing infrastructure development and service delivery through the public treasury and thereby allowing resources to be freed for social services; and

• to promote private sector contribution towards the attainment of positive social indicators associated with optimal access to infrastructure and services.

ADVANTAGES OF PPPS

• Speedy, efficient and cost effective delivery of projects;

• Value for money for the taxpayer through optimal risk transfer and risk management;

• Efficiencies from integrating design and construction of public infrastructure with financing, operation and maintenance/upgrading

ADVANTAGES …

• Creation of added value through synergies between public authorities and private sector companies, in particular, through the integration and cross transfer of public and private sector skills, knowledge and expertise

• Alleviation of capacity constraints and bottlenecks in the economy through higher productivity of labour and capital resources in the delivery of projects

• Competition and greater construction capacity (including the participation of overseas firms, especially in joint ventures and partnering arrangements)

ADVANTAGES …

• Accountability for the provision and delivery of quality public services through an performance incentive management/regulatory regime

• Innovation and diversity in the provision of public service;

• Effective utilisation of state assets to the benefit of all users of public services

EXAMPLES OF PPP• BALTIMORE’S CHARLES CENTER/INNER HARBOR.

• “massive downtown urban renewal projects” jointly planned and constructed by the City of Baltimore and the business community.

• a large-scale urban redevelopment project in central Baltimore’s downtown business district of the late 50s and 60s

• "Committee for Downtown" promoted a master plan for arresting the commercial decline of central Baltimore.

EXAMPLES OF PPPS

• THE SINGAPORE SPORTS HUB

• one of the largest sports facilities infrastructure Public-Private-Partnership (PPP) project in the world.

• PPP between the Singapore Sports Council and Sports Hub Pte Ltd., a consortium of private sector partners.

• The consortium entered into a 25-year contract with the Singapore Sports Council to design, build, finance and operate the Sports Hub.

EXAMPLES OF PPPS…

• THE GAUTRAIN RAPID RAIL LINK.

• a Public Private Partnership creature is owned by Gauteng Provincial Government, with Bombela Concession Company (Bombela) holding the 20-year Concession to design, build, part-finance and operate the system.

• Bombela manages the client (Gauteng Provincial Government) interfaces and provides an integrated solutions approach for this PPP project, led by an experienced executive team, promising passengers a state-of-the- art transport system

• Three main drivers for the Gautrain Rapid Rail Link:• stimulation socio economic development through job creation and the transfer of

skills, as well as the development of women and youth; • special development project – an urban sprawl management project.• a transport project and the project was designed to develop the economy and help

manage urban development.”

EXAMPLES …

• THE N4 TOLL ROAD FROM WITIBANK, SOUTH AFRICA TO MAPUTO• Another example of a successful road project PPP with a 30

year concession period.

• Involved the rehabilitation including construction of new road of 198km road

• Cost R3 billion ($324 million) by 1996 estimates

WHITHER HENCE.?

• The PPPA is in place.• The PPP Commission is in place• The Pensions Act is in place (Pension Funds)• There has been some decentralisation• The Private Sector is prospering and looking for Challenges• Why are we slumbering? Slumbering in degenerated cities?• As Economists what’s our role to trigger regeneration of our cities?

WHITHER HENCE

• An opportunity to turn calamities to opportunities

• An opportunity to create win win and win situations

…

THANK YOU.