Bakwena Platinum Corridor Concessionaire (Pty ) Ltd PPP in Practice CASE STUDY : BAKWENA by Leo Rohrig CEO Bakwena Platinum Corridor Concessionaire (Pty ) Ltd Introduction Allow me to start with a disclaimer : I am not a technical expert on RFID and consequently will not be responsible for any mishap befalling you, if the personal views and experiences, which I am going to share with you, should turn out to be irrelevant or even inapplicable to your business. PPP IN PRACTICE 20051124

SOUTH AFRICAN ROADS Total road network: 536,000 km National roads : 10,000 km Tolled roads : 2,421 km PPP concessions : 1,220 km For the maintenance of existing and the construction of new roads we have a funding back-log of 10 billion $ …. And yet, Only 2.5% of our paved road network is tolled and only half of the toll roads are provided by concessions. PPP IN PRACTICE 20051124

Toll Road Concessions Maputo Corridor Witbank - Maputo N4 510 km N3 Corridor Heidelberg - Cedara N3 410 km Platinum Corridor Warmbaths – Pretoria – Botswana N1 / N4 390 km The first concession was the Maputo Corridor from Witbank to Maputo on National Road 4 which is 315 miles long. The next was the N3 corridor from Heidelberg to Cedara on the Johannesburg to Durban grid with 260 miles. The third and last concession is the Bakwena Platinum Corridor on the N1 north and the N4 west with 245 miles. It is the Bakwena project which provided me with the experience which I’m going to share with you. Incidentally, the name Bakwena was derived from the name of a local tribe, meaning : People of the Crocodile. Hence our little logo. PPP IN PRACTICE 20051124

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

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

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

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

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

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

CHALLENGES TO BE MET Environmental approval process Anti Project campaigns Demonstrations and Obstructions Impact on Timing and Resources More directly related to our project where the following environmental challenges. The environmental legislation is often vague and untested in courts. Assessment process is cumbersome . Detailed regulations are missing or contradictory. Authorisations, once you get them, can and will be challenged. Bio-physical and socio-economic issues get mixed up. PPP IN PRACTICE 20051124

ENVIRONMENTAL EXPERIENCE Ensure : there are no genuine green issues Expose hidden commercial agenda Meticulous process compliance Involve public, record all I&AP contacts More directly related to our project where the following environmental challenges. The environmental legislation is often vague and untested in courts. Assessment process is cumbersome . Detailed regulations are missing or contradictory. Authorisations, once you get them, can and will be challenged. Bio-physical and socio-economic issues get mixed up. PPP IN PRACTICE 20051124

ANTI-PROJECT CAMPAIGNS FLYERS & PAMPHLETS PROTEST MEETINGS DISRUPTIONS OF INFO MEETINGS MEDIA MOBILISATION Common Characteristic : FEW FACTS – PLENTY EMOTION On top of that we faced a variety of anti-toll campaigns. They came at us with flyers and pamphlets, they conducted protest meetings and disrupted our information meetings and they availed themselves of every media form television, radio and daily press. And they tried to organise demonstrations. We soon identified the common characteristics in all of that – few facts – plenty emotion and we learned from it. PPP IN PRACTICE 20051124

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 The first thing we had to accept is the fact that concessions are quite complex. To make each component, the funding and financing, the design and construct aspect, the operation, maintenance and upgrade features, to make these transparent for your ordinary citizen is quite a challenge. So we unpacked the issues and repacked them into comprehensible components and embarked on a step-by-step information campaign reaching 5000 interested and affected parties, each one individually identified. We reached them with our roadshows and pamphlets and we reached countless more through media presentations and interviews. PPP IN PRACTICE 20051124

DEMONSTRATIONS & OBSTRUCTIONS Avoid confrontation Remain available to media Objective = make them ‘non-events’ Defuse : Introductory special offers We also dealt with demonstrations which the anti toll lobby organised. In our case, demonstration needed prior approval by the authorities, hence they were known in advance. This gave us the chance to influence their location and timing, definitely outside peak traffic hours. We convinced the police to keep a low profile, waiting discreetly in the vicinity, as did we : priority one is to avoid confrontation. But we remained available to the media, in fact we fed them “traffic” related positive information. You don’t ignore these activities but remember : The objective is to make them non-events. PPP IN PRACTICE 20051124

OUR CHOICE N1 Pretoria 10 km N1 Pretoria 10 km PPP IN PRACTICE 20051124

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

Partnership is sharing 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

RISK ALLOCATION RISK CARRIED by Tariffs Approved up front Discounts BPCC Protestor Action Traffic >>> REVENUE Design, Construction, Maintenance, Upgrading Overloading BPCC & SANRAL Competing Roads Termination BPCC, SANRAL, LENDERS PPP IN PRACTICE 20051124

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

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

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

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

The End I dedicate the rest of my allocated time to your lunch-break and rest my case. Thank you for your attention. PPP IN PRACTICE 20051124