An aerial view of multi-story buildings. Part of the Durban central business district including residential buildings and apartments. File Picture: Patrick Squire
The Public Private Partnership (PPP) model for the privatisation of government buildings necessitates the need to establish a state asset management company to directly raise equity, shareholding participation and generate sustainable revenue.
This is according to Minister of Public Works and Infrastructure Dean Macpherson, who was responding to a Parliamentary question by the IFP’s Siphosethu Ngcobo, a member of the Portfolio Committee on Public Works and Infrastructure.
Ngcobo asked the Minister what the full details of the findings of the assessment are into the economic viability of pursuing public-private partnerships for the privatisation of government buildings in Durban specifically, what the identified benefits and risks of this approach are, and how this initiative will benefit the greater public?
In a recent written response, Macpherson said the Department is undertaking various PPP initiatives to roll out various government facilities, such as Salvokop precinct development in Tshwane's inner city and others.
The Minister further explained that the current economic trajectory requires a change in approach, especially with the National Treasury signifying budgetary constraints to fund all identified capital projects.
He said there are vacant state properties in Durban which have been identified for asset optimisation and revenue generation strategy.
The strategy is set to invite requests for proposals for the various best uses of the properties through a PPP model.
There are various programmes that the department intends to roll out, such as the Build Operate and Transfer (BOT) and Refurbish Operate and Transfer (ROT).
“The model would create value through leveraging private sector capital to optimise state facilities for various uses. The programme is set to cushion the state from various inherent risks (cost escalations, project delays, lack of adequate and/or appropriate capital budget) and ensure that projects are completed within budget, quality, and on time,” he said.
Macpherson said the state will preserve its ownership of strategic assets through a long-term lease, varying from between 15 to 99 years.
“The optimisation strategy therefore has identified a need to appoint and eventually establish a state asset management company to enable the Property Management Trading Entity (PMTE) through such a subsidiary to directly raise equity, shareholding participation and generate sustainable revenue,” said the Minister.
Last November, the KwaZulu-Natal (KZN) Department of Public Works and Infrastructure signed a Memorandum of Understanding (MOU) with the city of eThekwini and National Public Works to collaborate on a more synchronised approach to deal with the issue of hijacked and abandoned buildings.
According to reports, weeks later, MEC Martin Meyer officially handed over the Esplanade Government Building (EGB) in Durban to construction company Enza Construction.
Almost R1 billion will be invested over the span of three years in the redevelopment of the EGB in Durban as the government sets in motion its plan to tackle problem buildings in the city.
Meyer said as a result of public-private partnership there has been an injection of hundreds of millions of rand into the EGB building, which will be transformed into a modern structure.
“Once complete, it will be home to multi-departmental staff, offices, and amenities. While this particular project is a multimillion-rand undertaking, the process to overhaul others like it makes the public-private partnership initiative a multibillion-rand endeavour,” he said.
A total of 15 government buildings have been released for Requests for Proposals following the MOU signing in order to seek ideas on how they can be better utilised.
EThekwini Mayor Cyril Xaba said apart from the initiative, the City had identified a total of 149 properties for disposal, and 91 have already either been released or are currently out for Request for Proposals.
karen.singh@inl.co.za