Concessions ProcessesPublic Private Partnerships

Presentation ObjectivesPresent a Case Study of SANParks concessioning covering:

� Brief Background of SANParks’

� Preparation & Planning;

� Processes for accommodation;

� Strengths & Weaknesses;

� Lessons learnt;

o What went well

o What did not

SANParks Background

� SANParks is a state run Conservation body;

� Manage a system of National Parks:

� 23 National Parks – Kruger & Table Mountain National Parks;

� Over 4m Hectares of land, 6 Biomes;

� Core Functions:

� Nature Conservation;

� Constituency Building; and

� Tourism – State run tourism infrastructure – Beds (from budget to 5 Star) + 7500k,

Camping beds +7500k

o External – through Commercialization or Public-Private Partnerships

PPP Preparation & Planning

� Park Management Plan (Conservation, P & C, Tourism Plan);

� Requirement for each park;

� Recreational Activities are identified;

� Possible tourism product identified (Internal or PPP);

� PPP in SA Context: Pls see website www.ppp.gov.za

� A commercial transaction : state institution + a private party

o Performs an institutional function, use of a state property for own commercial

purpose, assumes financial, technical and all risks, receives a benefit from

performing the function.

� In Summary, PPP = transferring risks from state institution to Private Party.

PPP Preparation & Planning

� If PPP, SANParks has a Strategic Plan for Commercialization;

� A medium term strategy that defines objectives, processes, roles;

� Value Objectives from SPfC

o Revenue Generation / loss minimization

o Infrastructure upgrades / dev. Of historic and /or cultural sites

o Job creation & BEE

o Tourism promotion

o Further biodiversity protection and conservation

PPP Project Cycle Accommodation

� Inception

� Review the potential for PPPs in the institution

� Prepare Strategic Plan for Commercialisation

� Pre-feasibility Study

� To establish the indicative viability of the project and to identify specific

issues that require detailed analysis

� Procurement

� Prepare and issue bid documents

� Evaluate bids…

PPP Project Cycle Accommodation

� Procurement continued…

� Select preferred bidder & Negotiation

� Sign PPP Agreement

� Development

� Measure outputs, monitor and regulate performance, liaise effectively,

settle disputes

� Operations

� Monitor and report progress

� Exit

Strengths

� Strong brands in SANParks stable of Parks:

� Commercialization = Demand > Supply.

� Good Governance in SA:

� Nat Treasury / PFMA Reg 16;

� SANParks is a parastatal (vs state institution, where there is no incentive

for surpluses).

� SANParks PPP leadership:

� Management support;

� Good team

Weaknesses

� Institutional skills for specialized project management of PPPs are

generally low in South Africa:

� Internal & Consultants

� PPPs are generally geared towards attracting high infrastructure

projects:

� Ecotourism projects are often smaller projects and it is the skills

rather than quantum of infrastructure that are critical to project

success

Weaknesses

� Weakness / Challenge?

� Private sector interest in smaller opportunity;

� Institutional cost of undergoing a PPP process is too high + cost of

pvt sector to participate in tenders

o Further discourages smaller / micro PPP participation

� Institutional buy-in at an operational level remains a challenge:

� Where the interaction happens: state & pvt sector are very

territorial.

Lessons Learnt: What Went Well

� Important to build & maintain a corporate culture that promotes PPP execution:

� PPP terms are often longer than government / board / management

lifecycles – continuity is important.

� State’s role in conservation:

� Ultimate guarantor (little ROI): only shorter-term tourism is concessioned

� Consistency in approach to all PPP projects

� Consultative Approach to PPP:

� Buy – in internally, at strategic levels are excellent.

� Effective and competent centralized contract management.

Lessons Learnt: What Went Wrong

� Partnership Maturity:

� State’s long-term view vs pvt sectors short-term one;

� Lodge Sector:

� Few large players, mostly SMME (relates to previous point);

� Outsourced Activities:

� Especially restaurants. Tourism = Brands, SPV = Newco,

� Technical Aspects vs others (financial & social)

� Dependant on technical. Relative weighting should be higher to avoid

market failure.

THANK YOU

Giju Varghese

Head: Business Development

South African National Parks

Tel: +27 12 426 5276, Mobile: +27 82 906 1979

Fax: +27 12 343 3849

E-mail: gijuv@sanparks.org