Do the PPP Manual and Standardised PPP Provisions apply also to municipal PPPs?

We Replied:

The PPP Manual and Standardised PPP Provisions are issued as Treasury PPP practice notes in terms of the Public Finance Management Act (PFMA) which governs the financial management of the national and provincial spheres of the South African government. They are therefore applicable to national and provincial departments and the public entities to which Treasury Regulation 16 to the PFMA applies. Municipal financial management is governed by the Municipal Finance Management Act (MFMA) which became law in 2003. Municipal PPP regulations are being finalised early 2005, and the PPP Unit is working on special Guidelines for Municipal PPPs. There is substantial policy consistency between the PFMA and MFMA PPP regulations, so while the institutional systems and decision-making processes differ, the principle approaches to PPP affordabilty, risk transfer and value-for-money are consistent.

You asked:

What is the difference between 'outsourcing' 'privatisation' and 'PPP'?

We Replied:

Unlike outsourcing (such as hiring a security or cleaning company to do a job), a PPP entails the private party taking very substantial risk for financing a project's capital and operating costs, designing and building a facility, and managing its operations to specified standards, normally over a significant period of time. In a PPP, the land typically belongs to the public institution, not to the private party, and the fixed assets developed in terms of the PPP are thus state property. Privatisation entails the sale/disposal of state property and functions - including all the assets and liabilities associated with that property and functions.

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