New Zealand unveils pathfinder prison PPP

New Zealand’s Conservative government announced today that its first PPP will be a 1,000-bed male prison in Wiri, in south Auckland. Expressions of interest will be requested by the end of this year with proposals due in by mid-2011.

New Zealand Infrastructure Minister Bill English and Corrections Minister Judith Collins announced today that the government plans to have the private sector build and manage a prison project in Wiri, in south Auckland.

The 1,000-bed male prison is the Conservative government’s first public-private partnership (PPP) and should be followed by other social infrastructure PPPs, particularly in the education sector, the authorities said. The future private partner is expected to design, build, finance, maintain and operate the new prison for a period of between 25 to 35 years, the government said in a statement.

While the announcement did not include any cost forecasts, the authorities said they expect to issue a request for expressions of interest during the first quarter of this year with proposals due by mid-2011. A request for proposals for government advisory roles will be issued next week.

The idea is to have the prison up and running by the end of 2014. Collins said the Wiri project will be the first to help plug a 2,270 prison bed shortage by 2019, leaving the door open for other prison PPPs.

Wiri prison is not the country’s first prison PPP though. That distinction belongs to Auckland Central Remand Prison, which was managed by the private sector until the previous Labour government terminated the arrangement “on ideological grounds”, the current Conservative government said in its statement.

The official announcement makes good on the government’s earlier promise to open the country’s social infrastructure projects to the private sector. That promise did not go unoticed with infrastructure investors Morrison & Co and Craigs Investment Partners, which teamed up earlier this year to launch the New Zealand Social Infrastructure Fund.

The vehicle aims to raise up to $125 million from an initial public offering of shares on the New Zealand stock exchange to contribute the first private sector tranche for the government-backed Public Infrastructure Partnership (PIP) fund.

The PIP fund, also managed by Morrison & Co, launched last October with a cornerstone investment of $100 million from the NZ Superannuation Fund to help fund the country's social infrastructure needs.