Public Private Partnership-Tips for Success

Karen Breytenbach, Senior Project Advisor, National Treasury, South Africa
Published: Thu 20 Jun 2013

Involvement of the treasury with the energy department is a key link to the development of projects, says Karen Breytenbach. She explains that it is essential to have the backing of the treasury when carrying out a credit enhancement program. Credit enhancement of the buyer of energy or in the event of government default, the treasury will stand behind the project so that the lenders and sponsors are more comfortable with the investment. South Africa’s treasury also runs the country’s renewable energy program on Public Private Partnership (PPP) principles and monitors the valuation and bidding process.

She suggests that when opting for the PPP model, clear goals must be put into place. “South Africa’s goal was to make the program work. We needed foreign investment for energy industry. Failure was not an option.” Ms Breytenbach explains that feed-in tariffs made for a successful bidding process as it introduced extreme competition, lowering prices significantly.

She also suggests that a team of expert consultants is essential to the success of a project. In conclusion, Ms Breytenbach explains why South Africa has turned to renewable energy: “The government committed to a green economy in order to reduce emissions and improve our ailing energy industry in the form of private sector funds. We needed competition to enhance the industry.”