BIG READ | Privatisation wave sweeps state-owned hospitality assets

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Opens in new windowOpens in new windowEnter fullscreen mode displaying this image.ExpandiSimangaliso Wetland Park has started a process to bring in private sector players to redevelop, manage and operate the Cape Vidal resort for a period of 50 years. Picture: Story audio is generated using AI

The government is increasingly putting state-owned bulk grain storage silos and hospitality assets such as nature reserves into private sector hands as public-private partnerships ramp up.

With the fiscus facing competing interests and debt-servicing costs gobbling up about R1.2bn a day from the public purse, the state has pivoted to roping in the private sector to run its non-core assets so they don’t eat into public funds.

Hospitality facilities have been prioritised for private sector participation — with the government looking to play more of a regulatory role than run facilities that can be better run by hospitality groups.

This week, the iSimangaliso Wetland Park, which manages an area of 1,328,901ha, started a process to bring in private sector players to redevelop, manage and operate the Cape Vidal resort for a period of 50 years.

The Cape Vidal project aligns with the iSimangaliso commercialisation strategy that seeks to optimise asset utilisation and revenue generation.

Going private “In this regard, iSimangaliso is actively responding to the government’s clarion call to foster partnerships and engage the private investment community in undertaking infrastructure development that supports service delivery,” iSimangaliso said in a tender document.

“Cape Vidal is characterised by a naturally protected bay that provides favourable conditions for swimming and snorkelling.”

“Cape Vidal is located in the eastern shores section of the iSimangaliso Wetland Park and is accessed through Bhangazi gate, bordering the town of St Lucia. It is a rare beach and bush destination. Cape Vidal offers travellers pristine beaches, incredible surroundings, and an abundance of wildlife that can be found within the area.”

The eastern shores section offers activities including ski-boating, surf fishing, whale spotting, wildlife and night-drive safaris, bird spotting, picnicking, swimming, snorkelling and turtle viewing.

To unlock the commercial potential of the facility, iSimangaliso is eyeing private capital to redevelop and upgrade the Cape Vidal resort to an attractive — at least three- to four-star — tourist destination.

Cape Vidal offers travellers pristine beaches, incredible surroundings, and an abundance of wildlife that can be found within the area.

The project term is 50 years, including a development period of four years at most and an operations period of 46 years.

The project comes shortly after Ezemvelo KZN Wildlife, which manages more than 800,000ha of high-value land in KwaZulu-Natal, launched a hunt for a private-sector partner to manage the vast estate, which includes more than 90 protected areas, as the government pivots from managing nature reserves.

The idea to commercialise Ezemvelo was first touted in 2007 but was not taken further. However, faced with financial pressures and competing interests from the fiscus, the government has now opted to introduce private partners in a move that puts hospitality groups on alert.

The entity had no choice but to revisit the 2007 idea in response to funding constraints and government directives, guided by the national public-private partnerships framework.

Ezemvelo KZN Wildlife faces financial and operational challenges in maintaining its extensive biodiversity estate — forcing it to adopt commercialisation as a critical component of its strategy for turning the financial tide by capitalising on its underperforming capital assets.

In Gauteng, the provincial government has dangled the Suikerbosrand Nature Reserve before the private sector in a move that might see the facility operated by tourism and hospitality groups for at least 25 years.

The Gauteng provincial government has dangled the Suikerbosrand Nature Reserve, above, for private sector investment. Picture: Moeletsi Mabe This comes as the government becomes more amenable to private sector custodianship of state-owned assets.

The Gauteng environment department issued a request for proposal to operate the approximately 18,000ha nature reserve, situated between the East Rand towns of Heidelberg and Alberton.

The reserve, situated just off the N3, was valued at R3bn in 2009.

The winning bidder is granted the right to develop, operate, and manage the Suikerbosrand Nature Reserve concession, the province’s largest nature reserve, which is managed by the environment department.

The mooted concession will see the state retain the title to the land and assets, with the private sector set to pay a monthly lease fee, which the department said cannot be less than R80,000.

The reserve has been on the receiving end of criticism by visitors, who have pointed out its dilapidated state. Its main revenue-generating activities are now limited to hiking, cycling and occasional game sales, with its hotel and other tourist facilities lying dormant.

The DA last year called on the Gauteng government to pour more investment into unlocking the reserve’s full potential.

Most of the tourist accommodation facilities, including those presently operational, are in a state of disrepair due to, among other things, lack of maintenance.

The reserve accommodation and conference facilities can accommodate about 1,900 people.

With the public purse stretched by competing interests, the Gauteng government, led by premier Panyaza Lesufi, has opted to woo private capital to invest in the reserve, which is among five owned by the state.

Some of the tourism facilities at Suikerbosrand include:

The North West government is also looking for private sector partners to operate state-owned bulk grain storage silos for the next 25 years.

The three silos — Springbokpan, Kraaipan, and Vryhof — have a combined storage capacity of 180,000t of grain.

These silos have historically been used mainly for grain from the maize triangle farming communities. Silos that were once used to full capacity have deteriorated over time due to poor maintenance and use.

“The objective is to secure a strategic partner with the necessary capital, experience and capability to rehabilitate, develop, and manage the silos sustainably, restoring them to commercial viability and maximising socioeconomic benefits for the North West farming community,” the North West department of agriculture & rural development said.

“Despite the condition of the two silos (Kraaipan and Vryhof), the potential remains for revitalisation through strategic investment and professional management.”

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