Abstract
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.
Highlights
Introduction and contextThe annual gross domestic product (GDP) growth rate for South Africa is estimated to be 0.2% in 2016 (Trading Economics 2016)
private partnerships (PPPs) are not used on a regular basis as a mechanism in the South African transport sector
PPPs can be used as a mechanism to delivery freight transport infrastructure
Summary
Introduction and contextThe annual gross domestic product (GDP) growth rate for South Africa is estimated to be 0.2% in 2016 (Trading Economics 2016). Economic growth is of critical importance for the country. The importance of sufficient and well-maintained transport infrastructure cannot be emphasised strongly enough. Transportation infrastructure is the backbone of a modern, competitive and productive economy. Interrelated and mutually reinforcing transportation infrastructure systems facilitate the efficient movement of freight, goods and services, promote trade and commerce, connect supply chains and reduce operating costs across a diverse set of industries. Does infrastructure stimulate economic development and growth but the prosperity of a country (Kessides 1993). Infrastructure development contributes to economic development through supply and demand channels, through the reduction in production costs and through contributing to the diversification of the economy. 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
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