UNIVERSITIES should only engage in public-private partnerships (PPPs) after careful consideration of the capacity needed to ensure that the public good is promoted through such arrangements, according to University of Nelson Mandela academics Heather Nel and André Hefer.
The academics said inclusive prosperity and sustainable infrastructure development can take place through public-private funding partnerships in the higher education sector.
Along with affordability and value-for-money, the overriding considerations when considering PPPs must always be the promotion of inclusive prosperity, sustainable livelihoods, and environmental stewardship, Nel and Hefer said.
Nel is the senior director for institutional strategy while Hefer is the university's Sustainability Engineer.
“Higher education institutions across the world are confronted with increasing pressure to provide quality, affordable education to students, while also engaging with society to co-create impactful solutions to intractable global challenges. Among these, a fast-growing population is resulting in the unsustainable consumption of resources such as water, food, and fossil fuels,” they added.
The National Treasury has set up a specialised unit which guides government departments wishing to embark on such partnerships and it may be worth exploring whether such a “shared services” arrangement would also benefit the higher education sector.
But Nel and Hefer said that the mass production of goods is using large amounts of energy and generating excess pollution and waste. On a global scale, consumption patterns and resource use in developed countries have, in general, a much larger ecological footprint than those living in the developing world.
This was a key focus of the recent 26th United Nations Climate Change Conference of the Parties (COP26) in Glasgow, because there was no viable pathway to net zero emissions that does not involve protecting and restoring the world's biodiversity on an unprecedented scale.
The academics considered the question: What informs sustainability in the higher education sector?
Highlighting that universities are informed by global, continental and national strategic frameworks such as the United Nations 2030 Agenda for Sustainable Development Goals: Agenda 2061; The Africa We Want and South Africa’s 2030 National Development Plan respectively. The academics said at the heart of all three blueprints are ambitious sustainability targets seeking to eradicate poverty and hunger, improve health and education, reduce inequality, and spur economic growth – all while tackling climate change.
Globally, universities are facing increasing pressure to promote long-term sustainability in a context where government funding is becoming severely constrained. When choosing a university, applicants and their families are interested in dimensions of campus life that contribute to a vibrant and holistic student experience both within and beyond the classroom, including state-of-the-art educational, research, recreational, arts, culture and sporting facilities. Additional demands on expenditure include deferred facility maintenance and the costs associated with digitalisation and keeping pace with technological advancement.
Against this backdrop, Nel and Hefer argue that universities are exploring creative ways to meet the often-competing needs and demands of various stakeholders in affordable ways. To this end, public-private partnerships (PPPs) can be implemented across a wide range of areas, including student housing, academic and co-curricular facilities, shared services, as well as promoting energy and water security.
Therefore, PPPs can be defined as formal arrangements between public and private counterparts to share risks and rewards in the delivery of public services and infrastructure. The Department of Public Works has released a draft of the proposed National Infrastructure Plan (NIP) for 2050 for public comment and this places significant emphasis on public-private cooperation as a mechanism to improve efficiencies in public infrastructure development. Other advantages of PPPs include enhanced value for money, access to the latest design trends and shared risk.
In addition to these benefits, they argue that universities must ensure that PPPs prioritise the welfare of students, employees and surrounding communities while simultaneously promoting responsible environmental stewardship. In doing so, significant expertise is required to manage the complexity of PPP agreements to ensure that they are a feasible alternative to conventional infrastructure development approaches. In many cases, project initiation becomes challenging when the contractor-client arrangement is steered towards benefits for all involved. If not properly managed, the focus on profit and speed could result in private developers implementing cost-saving measures that potentially compromise the public good. Universities may have limited input or control over this if the partnership model and agreement are not carefully constructed.
Nelson Mandela University has a photovoltaic plant situated in the Eastern Cape, which is a drought-stricken region with high levels of poverty and unemployment. As part of its commitment to sustainable environmental stewardship, the university has invested in the development of a 1 MW Photovoltaic (PV) plant on the Summerstrand South Campus with no feedback to the municipal grid, bound in a 10-year Power Purchase Agreement (PPA). In terms of the Electricity Regulation Act, 2006 (ERA), this constitutes small-scale generation (up to 1MW), off grid, or generation for “own use”, which should be registered with NERSA, but does not require a license to generate.
The advantages of this climate-smart PPP is that there is no initial capital outlay required towards the actual PV infrastructure coupled with low financial and technical failure risk.
Furthermore, there are no costs toward maintenance or operation of the plant for the duration of the partnership. Moreover, electricity purchase price from the PPA would be lower than electricity purchased from the municipality in years four and five. But the cherry on the top is that after the PPA term, the university takes over the plant, and it would produce energy until the plant is replaced at year 20-25.
Despite these wide-ranging benefits, there are some pitfalls such as contractual lock-in with a PPA developer for an extended period. The plant’s technical and performance requirements to be realised as initially envisaged in year ten, when the university takes ownership. Consideration needs to be given to how this will be managed contractually If these requirements are not met. The university will share the financial benefits from the PV plant with the private partner until it takes full ownership in year 10. Monthly charges in the PPA fluctuate with plant production, which is influenced by weather and load shedding.
It certainly is an innovative model!