Government risks sabotaging critical infrastructure projects with unrealistic preconditions for public-private partnerships

Government risks sabotaging critical infrastructure projects with unrealistic preconditions for public-private partnerships.

This is evident in Transnet’s handling of the privatisation process for the container terminals at Ngqura and the container corridor between Johannesburg and Durban.
Transnet is insisting that potential partners take on all 3 573 Transnet Freight Rail staff as a precondition for involvement in the corridor project, it was reported this week. In addition, prospective partners would need to invest over R5billion in the project, without acquiring any ownership stake. 

Unsurprisingly there has been little private sector appetite for these projects which have now been postponed, thereby further delaying long overdue private sector involvement in Transnet, notably its freight rail and port operations.

Sadly, it is highly unlikely government will attract private partners unless public private partnerships are based on sound business principles and policies. These include the policy of employing suitably qualified personnel to make the projects succeed. 

Government has committed to much-needed reform, especially in relation to key economic sectors such as energy and infrastructure. It needs to harness private sector expertise to help the public service perform better. But the key reason the private sector outperforms the public sector is because private businesses demand their staff perform. If a business fails to perform it loses customers and investors.

The same principle must apply to Transnet and its critical infrastructure projects that are too important to fail; they require sound business principles to underpin operations. Transnet leaders cannot be allowed to prioritise their own wellbeing over what is best for the country. As a country we find ourselves at an economic crossroads: either we insist on promised economic reform in order to grow the economy, or through our inaction we allow government to repeat the mistakes that have crippled many of our state-owned enterprises.

Jacques Moolman
President of the Cape Chamber of Commerce and Industry