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Original Research
Private–public partnerships: A mechanism for freight transport infrastructure delivery?
Submitted: 28 August 2016 | Published: 27 February 2017
About the author(s)
Hans W. Ittmann, Institute for Logistics and Transport Systems Africa, University of Johannesburg, South AfricaAbstract
Background: Freight transport infrastructure is an indispensable requirement for economic growth, development and prosperity. Public–private partnerships (PPPs), as a mechanism to fund and construct freight transport infrastructure, have been suggested by many in private and public sectors.
Objectives: The concept of PPPs is dealt with, and the relevance of this mechanism is expanded upon. It is clear that PPPs in the rail environment present huge challenges and complexities. The objective was to determine whether PPPs are a viable mechanism to fund freight transport infrastructure in South Africa.
Method: Experiences with rail PPPs worldwide have shown that many failures occurred implementing these. The challenges and complexities of PPPs, in the freight rail environment, are highlighted together with the benefits, risks and best practices of PPPs. It is shown that suitable policies, legislation and regulations concerning PPPs are in place in South Africa.
Results: A proper framework and methodology to proceed should be in place. PPPs take time and are complex. Government involvement remains essential. Firm contractual agreements between parties are essential. Risk handling, risk sharing and the magnitude of risks should be clarified with agreement on where the risks reside. Financial viability, with value for money (VfM) and financial benefits for private sector role players are non-negotiable.
Conclusion: Appropriate legislation for implementing PPPs must be in place while two further important elements are economic circumstances and proper project execution. Taking all these factors into consideration, the freight transport sector can only benefit from successfully negotiated and implemented PPPs.
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