New infrastructure finance, implementation support agency to be established to support PPPs

21st February 2024 By: Darren Parker - Creamer Media Contributing Editor Online

National Treasury has revealed the planned establishment of an infrastructure finance and implementation support agency during the 2024/25 fiscal year to coordinate the planning and preparation of large public-private partnership (PPP) projects and to crowd in private-sector finance and expertise.

In addition to engaging directly with private financial institutions, the newly established agency will incorporate the functions of project preparation, PPP technical support and data management.

According to the 2024 Budget Review released on February 21, departments, public entities and municipalities will be able to use the agency’s services to prepare, plan and execute projects.

The announcement follows a comprehensive review of the PPP regulatory framework, whereafter National Treasury began implementing recommendations for reforms to reduce waste and inefficiency, improve quality and increase the impact of public investment on growth.

The establishment of the agency represents one of the key elements of these reforms, as government aims to increase the use of PPPs to deliver infrastructure projects, while reducing fragmentation and duplication across the different spheres of government.

National Treasury said that proposed amendments to the PPP regulatory framework, currently out for public comment, were intended to encourage more regular use of PPPs and revive the pipeline, harnessing private financing and capitalising on private-sector efficiencies.

It said that red tape will be reduced by granting exemptions for projects valued below R2-billion from obtaining multiple approvals, while limits on the ability of accounting officers to cancel key projects that have passed the feasibility stage will provide greater security to investors.

National Treasury has drafted amendments to the National Treasury Regulation 16 and the Municipal Regulation 309, which govern PPPs. It aims to publish these amendments for public comment in the coming year.

The amendments aim to reduce procedural complexity in PPP implementation by fixing regulatory gaps, streamline institutional relationships across the PPP project cycle, make it easier for the private sector to engage with investment opportunities, strengthen fiscal risk governance and re-energise the development of a bankable pipeline of transactions to mobilise private capital.