The key success factors in water infrastructure financing : a case study of the Rustenburg water services trust

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Stellenbosch : Stellenbosch University
ENGLISH ABSTRACT: The need for infrastructure development, its catalytic effect on economic growth and the importance of the application of project finance to fund development, cannot be underestimated. According to literature, the involvement of the private sector in infrastructure development is recommended to improve service delivery efficiency and in the case of project finance ensure profitability. This is central to the principal-agent, property rights and public-choice theories. Seeing that, water supply has been highlighted by the World Economic Forum as one of the top ten risks that faces the world; the key focus of this study was the application of project finance to the water sector in South Africa. This study aimed to identify the key success factors of the financing and procurement of water infrastructure in South Africa, using the Rustenburg Water Services Trust as a case. It was a qualitative study inclusive of the coding of data collected through semi-structured interviews and a desktop study. It was found that the success of the upgrade of the Rustenburg WWTW, Boitekong WWTW and the recommissioning of the Bospoort Water Treatment System, was based primarily on the adequate mitigation of risk. One of the major risks mitigated was the market risk usually covered by the public sector in this case, local municipalities. This risk was mitigated by having “take-or-pay” agreements signed by the mining companies (including Anglo-American Mines) within the area. Other success factors are: political will and collaboration between the private and public sector; the proper allocation of risk to the project participants that are best positioned to manage them; educating public officials about the use of project finance and establishing a Special Purpose Vehicle (SPV); and the effective monitoring of progress made by the private sector. Finally, it was realised that when public and private sector partners take a seat at a round table, infrastructure development can be tackled successfully for the promotion of economic growth.
AFRIKAANSE OPSOMMING: Geen opsomming beskikbaar
Thesis (MA)--Stellenbosch University, 2015.
Water, Infrastructure (Economics)