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PPC Ltd’s CEO puts his money where his mouth is

Ketso Gordhan, CEO of the leading supplier of cement in southern Africa, PPC Ltd, has called for the creation of an infrastructure negotiation body similar to that of the Convention for a Democratic South Africa (Codesa) as a critical step to kick start implementation of much needed infrastructure development in South Africa.

“It is clear that infrastructure bottlenecks by both the public and private sectors need to be addressed, not through agreeing to generic accords but rather through implementable plans with clear roles, responsibilities and deadlines. The methodology is simple. Before 1994 people wanted a democratic South Africa. The National Party and the ANC both raised issues that were preventing them from moving forward in this regard. So, they put together a working group on each of those issues and came back with solutions. All the things that we see today were compromises that emerged from discussions and negotiations,” said Gordhan.

Speaking at an International Project Finance Association (IPFA) event in Sandton last week, Mr Gordhan was adamant that negotiations between the national government and the private sector would substantially increase the number of infrastructure developments completed.

“Moves like this are where we can make the most significant impact on our global competitiveness as a country. We continue to score poorly in the World Economic Forum’s Global Competitive Index and we have to come to terms with the fact that we cannot boost the competitiveness of our economy, boost sustainable infrastructure growth and boost job creation by doing more than agreeing to the ideals of a plan,” he said.

By getting the national government and private sector together in one room, Gordhan said that many problems currently facing the industry would be solved. One of the biggest issues government has is that they believed they overpaid on previous public–private partnerships (PPP).

“Let’s use the prison example. Government had a description of the sort of prison it wanted to have; if you had a look at the description it looked like a 5-star hotel. Instead of the private sector coming back and saying that it is not very functional, now we have something that is way too expensive. It costs us around R75,000 a year for one prisoner per year; a pensioner gets R1,200 a month. If you weigh up those two things; here is a guy who has done something wrong so we lock him up. The reality is it is costing us that much money each year, it just doesn’t sound right,” he said.

Regarding previous sectors in the PPP arena, Gordhan believes there are three reasons why success has been experienced in the last 15 years. Firstly, it was due to a strong political will to get the job done.

“If there is a strong political will to get something done, the chances of success are much higher. We saw that with the Gautrain project; it was because the MEC, Premier and the national government really wanted the project to get done,” he explained.

Secondly, the existence of strong officials on projects was crucial. “They knew how to get the decisions through the various mechanisms in government; how to interact with the private sector; and how to get the best advice to make things to happen. A strong official makes a huge difference”.

Gordhan believes that the third reason was the combination of all of these and the existence of a very simple transparent process with a clear allocation of risk. “If all these things are present there will be no debates about who should be doing what. Once you have a clear-cut mechanism for dealing with the project, the chances of success improve immensely.”

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