OPERATING MODELS

What is PPP?

South African law defines a Public Private Partnership as a contract between a public sector institution/municipality and a private party, in which the private party assumes substaintial financial, technical and operational risk in the design, financing, building and operational of a project. Two types of PPP are specifically permitted;

• Where private party performs an institutional/municipal function
• Where the private party acquires the use of state/municipal property for its own commercial purpose. A PPP may also be a hybrid of these types

The way a PPP is defined in the regulations makes it clear that;

• A PPP is a simple outsourcing of functions where substantial financial, technical and operational risk is retained by the institution
• A PPP is not a donation by a private party for a public good
• A PPP is not a commercialisation of a public function by the creation of state-owned enterprise

These are the key features of PPP’s that make them inherently suitable for achieving BEE objectives

• The long-term nature of PPP’s provides an opportune instrument to grow back equity and black management overtime
• Risk is clearly identified in PPP’s, clearly cost and appropriately allocated, so participants know in advance what they are committing to
• The formation of private consortia in the form of special purpose vehicles (SPV’s) for many PPP’s, facilitates long-term beneficial partnerships between new black and experienced, resource companies – both as equity partners and in projects management and the private party SPV and subcontracting levels
• Where government is the buyer of a service and insofar as the service is provided to the agreed standards, there is a steady revenue stream to the private party, reducing risk to new enterprises
• Principal equity sponsors in a PPP are often also first-tier subcontractors, thus structurally incentivising optimal risk management
• PPP provide significant subcontracting opportunities for black enterprises, where early cash-flow benefits can be derived as delivery commences
• PPP creates jobs
• PPP develop skills
• Return on equity to the private party is generally competitive where risk is properly assumed

Myboet General Trading also obviously works within standard commercial structures and is particularly focused on strategic alliance and joint venture relationship within a wide netwok of highly capable organizations, so as to ensure that it can provide total solutions to wide range of transport application.