WHEN the reconstructed Chapman's Peak road between Hout Bay and Noordhoek is formally reopened in December, it will be a milestone not only in engineering but also in co-operation between public and private sectors.

Werner van Oudenhove, head of concession-based financing at RMB Project Finance, says the R150m toll-road concession, an innovative mix of merchant banking expertise, governmental impetus and engineering knowhow, is the latest of a series of groundbreaking public-private partnerships arranged and underwritten by Rand Merchant Bank (RMB).

"RMB is the arranger and a lender in this partnership, which involved funding the repair of the road and the construction and implementation of safety measures, including catch-fences and related infrastructures to guard against the effect of rockfalls. It was a series of such rockfalls that caused the closure of the 10km stretch of road in 2001, with devastating consequences for the local economies."

He says the catch-fences, chutes, canopies, gulleys and half-tunnel constructed in the mountainside to mitigate the effect of mud and rockfalls are based on the latest avalanche technology from Switzerland.

The Chapman's Peak project is known as a design-build-financeoperate transfer. A private sector consortium designed and is building the sophisticated, antirockfall infrastructure and toll road, and will operate and maintain it for 30 years.

At the end of that period, the project and its infrastructure will be transferred to the Western Cape provincial administration.

The R150m project cost was funded in two phases, using a mixture of debt, equity and grant capital. RMB provided a 20-year structured debt facility.

The project, which was won via a competitive tender process, is unusual in a number of ways:

It is the first toll road deal concluded directly with a province;

It is the first toll road deal concluded under the recently enacted Public Finance Management Act;

It is the first deal concluded with a unit of the national treasury on a limited recourse basis;

The Western Cape provincial administration is an active participant in the project and supplied significant capital; and

A portion of the value in the project has been put aside for a community trust.

"We expect the deal will create a new benchmark for such partnerships and will provide a template for similar deals in the future," Van Oudenhove says.

He says RMB has been behind other such projects, including the Inkosi Albert Luthuli Central Hospital in KwaZulu-Natal.

Oct 29 2003 07:01:54:000AM  Business Day 1st Edition