Lessons from transforming a South African special-purpose vehicle into a project implementation agency

Abstract

The Trans-Caledon Tunnel Authority was established in 1986 as a special-purpose vehicle to implement the South African side of the binational Lesotho Highlands Water Project. In 2000, it was transformed into a generic public project implementing agency. In this role, it has funded and implemented the timely and economical delivery of large strategic water projects. Its implementation methodologies avoided many of the risks associated with such projects, due largely to the disciplines imposed by its financing model. However, the organisation remains subject to political uncertainties, which means that its project pipeline is dependent on unpredictable mandates, which limits its ability to plan its operations. It nevertheless provides a useful case study of the mobilisation of private finance for public sector infrastructure projects as well as the political challenges inherent in public sector institutional reform.