Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003)Chapter 11 : Goods and ServicesPart 2 : Public-private partnerships120. Conditions and process for public-private partnerships |
| (1) | A municipality may enter into a public-private partnership agreement, but only if the municipality can demonstrate that the agreement will— |
| (a) | provide value for money to the municipality; |
| (b) | be affordable for the municipality; and |
| (c) | transfer appropriate technical, operational and financial risk to the private party. |
| (2) | A public-private partnership agreement must comply with any prescribed regulatory framework for public-private partnerships. |
| (3) | If the public-private partnership involves the provision of a municipal service, Chapter 8 of the Municipal Systems Act must also be complied with. |
| (4) | Before a public-private partnership is concluded, the municipality must conduct a feasibility study that— |
| (a) | explains the strategic and operational benefits of the public-private partnership for the municipality in terms of its objectives; |
| (b) | describes in specific terms— |
| (i) | the nature of the private party’s role in the public-private partnership; |
| (ii) | the extent to which this role, both legally and by nature, can be performed by a private party; and |
| (iii) | how the proposed agreement will— |
| (aa) | provide value for money to the municipality; |
| (bb) | be affordable for the municipality; |
| (cc) | transfer appropriate technical, operational and financial risks to the private party; and |
| (dd) | impact on the municipality’s revenue flows and its current and future budgets; |
| (c) | takes into account all relevant information; and |
| (d) | explains the capacity of the municipality to effectively monitor, manage and enforce the agreement. |
| (5) | The national government may assist municipalities in carrying out and assessing feasibility studies referred to in subsection (4). |
| (6) | When a feasibility study has been completed, the accounting officer of the municipality must— |
| (a) | submit the report on the feasibility study together with all other relevant documents to the council for a decision, in principle, on whether the municipality should continue with the proposed public-private partnership; |
| (b) | at least 60 days prior to the meeting of the council at which the matter is to be considered, in accordance with section 21A of the Municipal Systems Act— |
| (i) | make public particulars of the proposed public-private partnership, including the report on the feasibility study; and |
| (ii) | invite the local community and other interested persons to submit to the municipality comments or representations in respect of the proposed public-private partnership; and |
| (c) | solicit the views and recommendations of— |
| (i) | the National Treasury; |
| (ii) | the national department responsible for local government; |
| (iii) | if the public-private partnership involves the provision of water, sanitation, electricity or any other service as may be prescribed, the responsible national department; |
| (iv) | any other national or provincial organ of state as may be prescribed. |
| (7) | Part 1 of this Chapter applies to the procurement of public-private partnership agreements. Section 33 also applies if the agreement will have multi-year budgetary implications for the municipality within the meaning of that section. |