Phologo Pheko

Name: Phologo Pheko
Position: Partner, Fasken Martineau
Event: Africa PPP

What is Fasken Martineau looking to gain from the Africa PPP conference?

Insight into the perspectives of the professionals and other colleagues operating within PPP market to ascertain their level of confidence in the PPP market going forward.

Do you think there will be any new laws or legislation regarding PPP’s in South Africa?

No. Treasury Regulation 16 and the Municipal PPP Regulations have proved to be efficient pieces of legislation and a positive enabler for PPPs within the South African market. We do not see a need for any further legislative development in that regard. The framework within the regulations is popular within the SADC region and other parts of Africa to such an extent that there are efforts within certain jurisdictions to adopt the model.

How important is legislation when implementing PPP’s?

It is fundamental. I can safely say that the absence of an efficient regulatory framework governing PPPs will mean no PPP activity within the jurisdiction concerned. Regulatory certainty inspires confidence amongst sponsors, investors and lenders. It also plays a crucial role in the bankability discussion related to PPPs.

What has been your experience on working with PPP projects in Africa? And can you tell us a bit about the projects?

Political will is fundamental to the success of a PPP project. You can have 90% of the ingredients necessary for a successful PPP, but the absence of political will for the PPP will compromise whatever endeavour has been expended in signing or closing a PPP. We have been involved in projects, which have been ongoing for years only to have them ‘pulled’ close to signature of the PPP Agreement or to closing. The bidding documentation often make it clear that bidders have no right to recover their bid costs from the procuring institution. Accordingly, it is left to the discretion of the procuring institution as to whether or not the preferred bidder or reserve bidder are reimbursed for their costs. This is not ideal. Our African and non-African clients have had great appetite for PPP opportunities within the African market. However, experiences such as the stalled Renewable Energy IPP Procurement Program do not inspire confidence and the consequence is a reduced appetite for PPP opportunities, which is not a ideal for a continent in need of foreign direct investment and intervention as far infrastructure development is concerned.

What would your advice be to business partners looking to go into a new PPP?

I would recommend that they commit their efforts in knowing whether there is political will for the PPP. It is quite an effort to put together a bid for a PPP opportunity. It takes time and money. From an equity investor perspective, the value of your contribution is only realised long after the PPP Agreement and other transaction documents are signed. So it is important to determine whether such investment, i.e. the time and money, is worthwhile before it is expended.