Exploring the Role of PPPs in Benefiting Large-Scale Projects like the New Tygerberg Hospital

Thorpe Koorts discusses the use of a Public-Private Partnership (PPP) for the construction of the new hospital in South Africa due to its massive scale and affordability. The private party will assume responsibility for designing, constructing, financing, and maintaining the hospital for 20 years, with the provincial treasury contributing a capital contribution.

The unitary payment, covering the private party's investment, will be paid from the operational budget. Given the high construction cost of over five billion Rand and the old hospital's exceedingly high maintenance cost, the more feasible financial model involves having a private party build and maintain a new hospital.

The project, which has received approval from National Treasury, has also received positive feedback from financial institutions during market sounding. Stakeholders, including the government and private sector partners, are eager about the PPP model due to the transfer of skills, risk sharing, and potential for cost savings and improved efficiency.