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Infrastructure Delivery through PPP’s in the Eastern Cape

Presented by : Eugene V. Jooste

CHIEF FINANCIAL OFFICEREastern Cape Department of Roads & Public Works

Overview

• INTRODUCTIONThe uniqueness of the Eastern Cape– The uniqueness of the Eastern Cape

– The Infrastructure Backlogs– Infrastructure Co‐ordination Challenges

• PPP’s and Infrastructure Delivery in the EC• PPP process and a Health PPPL l t / M th /R liti• Lessons learnt / Myths /Realities

• PPP Opportunities• Way forward

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The Eastern Cape

• The administrations• The ruralness• The inequities• The demographics

Infrastructure Backlogs

• Education• Health• Roads• Public Works• Housing

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Infrastructure Co‐ordination

• National• Provincial• Local

EC PPP’s

• Health– Kouga Partnership PPP (Humansdorp)Kouga Partnership PPP (Humansdorp)– Port Alfred – Settlers PPP (Port Alfred & Grahamstown)

– Pharmacuetical Depot’s – SCM system improvements– Residential Accommodation for Health Professionals at St Elizabeth’s Hospital (Lusikisiki)

• TransportTransport– White fleet

• Public Works– Bhisho & Mt Alyff Office Park 

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A Health PPP

• Introduction• The Objectives• The Results

Public Private Partnerships

Case StudyPort Alfred & Settlers

Hospitals

Kantha RattayLegal Consultant

KR Legal Consulting

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Settlers Hospital• Existing public hospital 219hospital‐219 Beds

Settlers Hospital

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Settlers Hospital

Settlers ‐ Initial Govt Requirements

• General upgrade of Buildings and Infrastructure:– General, CSSD, Laundry, Boilers, Radiology & Mortuary

• Improved Casualty / Trauma Unit & Outpatient.

• New Private Ward and Maternity.

• Upgrade Kitchen.

• Enlarged Pharmacy (incl. air‐conditioning).

• IT and  Medical Equipment.

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Existing Settlers Hospital

Foyeroye

Existing Settlers Hospital

Medical W dWard

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Existing Settlers Hospital

Medical Ward

Theatre

Existing Settlers Hospital

Medical Ward

Theatre Pharmacy

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Existing Settlers Hospital

Medical Ward

Theatre PharmacyWaiting Area

Existing Port Alfred Hospital

• 60 beds, l 41only 41 

used.

• Allow 12 beds for immediateimmediate private use

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Port Alfred ‐ Initial Govt Requirements

• General upgrade of Buildings and Infrastructure:

• New Private Wing• New Theatre ComplexInfrastructure:

– General– CSSD– Laundry – Kitchen– Stores

• New Theatre Complex• New Casualty / OPD Unit• Consulting Rooms and 

Offices• IT Equipment• Hospital Equipment

– Mortuary

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Existing Port Alfred Hospital

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Existing Port Alfred Hospital

Existing Port Alfred Hospital

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Existing Port Alfred Hospital

Existing Port Alfred HospitalCorridor

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Existing Port Alfred HospitalKitchen

RFP‐ PPP ‐Key Factors for Government

• Human resources a key challenge

• Hospitals must remain operational

• Structure different to experience at Bloemfontein

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RFP‐Institution Needs• Upgrade existing hospital facilities to modern specifications

• Improved medical equipment

• On‐going maintenance to keep to above at high standard

• Provision of certain non‐core services

• Transfer of skills

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RFP‐What the Institution offered

Ri ht t t bli h l t d i t h it l• Right to establish co‐located private hospital facilities on premises

• Unitary payment:• Fixed component;• Variable component; and• Profit share to Institution

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RFP‐Structure of Co‐location PPP• Private Party upgrades & maintains facility and provides non‐core services;

• Public sector serves public patients (doctorsPublic sector serves public patients (doctors, nursing & pharmaceuticals)

• Private party serves private patients in dedicated wards

• Each party has own exclusive use areas (e.g.. Theatres)Theatres)

• Shared facilities for joint use (e.g.. Admissions)• Cross servicing for some services at agreed charge per use (e.g.. Maternity)

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RFP‐Non‐core Services Required

• Estate maintenance.• Ground and gardens.Cl i• Cleaning.

• Patient catering.• Security.• Waste control.• Pest control.U ili i ( d i )• Utilities management (rates and services).

• Life‐cycle asset management.

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RFP‐ Human Resources

• Only non‐clinical posts are be affected 

• Institution position = no retrenchments

• Unions informed and support PPP process

• Looking for innovative solutions from partner

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RFP‐ Site Issues• Environmental requirements expected to be limited;

• Heritage issues for Port Alfred – affects various outlying buildings ;

• Heritage requirements at Settlers;• Private party to bear risks of any environmental and heritage requirementsenvironmental and heritage requirements 

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RFP‐ Private Hospital Licence• Obligation of Private Party to obtain licence;

• Not automatically granted by right of PPP but would• Not automatically granted by right of PPP but would have full Institution support;

• Likely to be condition precedent to PPP;

• Application for private licence in Grahamstown :Ri h b i Ph 2 li i f li• Right to submit Phase 2 application for licence obtained;

• Application will be evaluated in terms of Regulations.

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Timetable as per RFQ – November 2002

• Issue of Expression of Interest

• 8 ‐10 November 200215 N b 2002Interest

• Site visit• Submission of EOI• Evaluation of EOI completed

• 15 November 2002• Settlers: 10:00• Port Alfred: 14:00• 22 November 2002• 06 December 2002

• Announcement of shortlist

• 10 December 2002

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Process• RFQ issues November 2002

RFP 2003• RFP 2003

• 2 Bids Received:– Nalithemba‐ Netcare led consortium– Life Health led consortium (later withdrew)

• Negotiations with Nalithemba‐ commenced 2005

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Process• PPP Agreement  signed 7 May 2007

• Financial Close November 2007

• Initial capex –in excess R200 million

• Project Costs over lifecycle‐ R600 million

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Project Structure

Eastern Cape Department of Health

Nalithemba  Hospitals Inca

NetcareQapelaVestline

ProHealth

PPP Agreement

Loan Agreement/s

Shareholders’Agreement

WBHO  & ProkhayaConstruction  Netcare Management

Facilities  Management

WBHO  & ProkhayaConstruction 

Key terms of PPP Agreement

• 17 year concession period17 year concession period– 2 years construction period– 15 year operations period

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Key terms of PPP Agreement• Private Party to:

– Design, refurbish and upgrade Settlers;g , pg ;– construct entirely new hospital at Port Alfred; – Supply and refresh all medical and IT equipment;– Operate and maintain the hospital– Train and manage nurses

id i i l i S l i l– Provide transitional services at Settlers Hospital

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Key terms of PPP Agreement• Private Party to:

– Establish and operate a help desk p p– Provide non core services, such as gardening, security

– Operate a private wing – Finance projectComply with BEE obligations– Comply with BEE obligations

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Key terms of PPP Agreement• Penalties levied for non compliance 

• Government to: – Provide Site– pay Unitary Payment– Provide clinical services 

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Settlers Hospital• Public wards upgraded – same capacity 219 beds• New private ward‐ 32 beds‐constructed• New Public Outpatient and ARV DepartmentNew Public Outpatient and ARV Department• New Wing‐Shared Services

– Accident and Emergency– Theatres (3)Private Party manages, but staffing is split two‐thirds/one‐ third– ICU– RadiologyP i t P t t d d G t i h d tPrivate Party operates and manages and Government is charged at UPFS tariffs

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Port Alfred Hospital• New Public wards– same capacity 60 beds• New Private ward‐ 33 bedsN Wi Sh d S i• New Wing‐Shared Services – Accident and Emergency– Theatres (2)Private Party manages, but staffing is split equally– ICU– RadiologygyPrivate Party operates and manages and Government is charged at UPFS tariffs

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Both Hospitals• New Equipment provided (including refreshed)• Soft Services:

C t i– Catering– Cleaning– Linen and Laundry– Security– Waste Management– Pest Control – Gardening and Estate Maintenance– Help Desk

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Completion Milestones• Port Alfred New Building opened in February 2009

• Settlers Hospital opened in Phases– Public maternity ward‐May 2008– Some public wards‐ July 2008– Remaining public wards and kitchen‐ September 2008– New OPD, Casualties and Radiology‐ January 2009– Private wards, private maternity, ICU‐ June 2009– Fully operational‐ August 2009

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Upgraded Settlers Hospital

Old‐FoyerO d oye

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Settlers Hospital

Old‐Waiting 

Pharmacy

gArea

Upgraded Settlers Hospital

Old‐Foyer

Children’s ward

O d oye

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Settlers Hospital

Old‐FoyerO d oye

Upgraded Settlers Hospital

Old‐Foyer

Children’s ward

O d oye

New Accident/ Emergency

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Settlers HospitalOld‐Medical Ward

New Maternity Ward

Upgraded Settlers Hospital

Old‐Foyer

Children’s ward

O d oye

New Accident/ Emergency

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Upgraded Settlers Hospital

Old‐Foyer

Children’s ward

O d oye

New Accident/ EmergencyPublic Maternity Nursery

Settlers HospitalOld‐Theatre

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Settlers Hospital

Shared ICU

Settlers Hospital

Shared ICUShared X‐Ray

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New Port Alfred Hospital

Port Alfred Hospital

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New Port Alfred Hospital

Shared Accident & EmergencyShared Reception & Admissions

New Port Alfred Hospital

Shared Accident & Emergency Shared Neo‐Natal ICUPublic Outpatient Waiting Area

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New Port Alfred Hospital

Shared Accident & Emergency Shared Neo‐Natal ICUPublic Outpatient Consulting Room

New Port Alfred HospitalOld Corridor

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New Port Alfred Hospital

Shared Accident & Emergency

Port Alfred Hospital

Old Kitchen

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New Port Alfred Hospital

Shared Accident & Emergency Shared Neo‐Natal ICUPublic Children’s Ward

New Port Alfred Hospital

Shared Accident & EmergencyShared Labour RoomShared Theatre ComplexShared TheatrePrivate Ward

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New Port Alfred Hospital

Shared Accident & Emergency Shared Neo‐Natal ICUPublic Pharmacy

New Port Alfred Hospital

Shared Accident & Emergency Shared Neo‐Natal ICUBathroom

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New Port Alfred Hospital

Shared Accident & EmergencyShared Labour RoomShared Theatre Complex

New Port Alfred Hospital

Shared Accident & EmergencyShared Labour RoomShared Theatre ComplexShared Theatre

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New Port Alfred Hospital

Shared Accident & Emergency Shared Labour Waiting Area

New Port Alfred Hospital

Shared Accident & Emergency Shared Neo‐Natal ICUShared Labour Room

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Lessons learnt 

PPP Opportunities

• Roads• Education• Public Works

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Conclusions

• Acknowledgements