European Report
PFI in the UK
The UK's PFI market has grown considerably over the past decade. What role does the UK government see PFI playing in the future, and what are the principles behind recent developments in the market? By Geoffrey Spence, Head of Private Finance Unit, HM Treasury.
The negative tries to go positive
The ‘not for' concept is currently in vogue in some government procurement circles. The fad, as its prefix suggests, is a negative response to the early workings of the Private Finance Initiative (PFI). Whilst the buildings delivered were fine or if not fine fixed at the private sector sector's expense, the whole refinancing issue put a spotlight on the profits made by the concessionaires. Hence the ‘not for' response, a negative response but one which could lead to some positive procurement examples if simplicity is maintained. By Rod Morrison.
The MoD's strategic sealift RORO project
At the end of June 2002, the British Ministry of Defence signed and closed the ROROs project, which provides for the services of six vessels for military transport during a period of over twenty years at a through life cost of around £950m. This is a highly innovative PFI project, involving assets which may be required to go anywhere in the world, and was achieved in spite of a background of uncertainties in the insurance and shipping markets of the world. By Edwin Godfrey, senior commercial partner at Simmons & Simmons and legal adviser to the Ministry of Defence on the ROROs project.
PFI races to meet tough EU waste deadlines
How effectively is the Private Finance Initiative being harnessed to deliver the massive investment programme required to develop the country's waste management infrastructure? This paper reviews progress to date and the future of waste management PPPs in the UK. By Robert Winchester, Head of Ernst & Young's Waste Management PFI/PPP Practice.
The supports for a new era for infrastructure in Italy
The necessity of fostering investments in infrastructure in Italy has already been discussed in this magazine in the past1. The Government has taken on board this onerous task as one of the fundamental goals of its legislative mandate2. By Velia Leone, head of the legal department at the Unita Tecnica Finanza di Progetto, the Italian government's public-private partnership task force.
Grande Porto, the last of the SCUTS
It was neither the biggest, nor the longest, but the SCUT Grande Porto concession, which was won by the Mota-led Lusoscut consortium and signed on September 16th 2002, will be significant as it is the last of the seven Portuguese SCUTs (shadow toll roads) and, hence, it provides the opportunity to reflect on the programme as a whole and put it into its local and international perspective. By Nigel Purse, head of Espirito Investment, the investment banking division of Banco Espirito Santo, in London.
The A28 in France, a deal that points the way ahead
The E915m, A28-E402 toll-road project between Rouen and Alen? in Normandy, France, reached financial close earlier this year. It is the first limited-recourse project financed motorway in France. It is also the first time that a non-sovereign entity has issued inflation index-linked bonds in the Eurozone. The A28-E402 opens new perspectives for the financing of public-private partnerships in the region. By Benjamin Sirgue and Maria Mounina from CDC IXIS Financial Engineering.
Real tracks in Eurorail
One year on since Project Finance International took stock of heavy rail projects pending in Europe, real steps have been taken on some of those highlighted prospects. Slow progress due to the expensive, highly political and strategic nature of heavy rail means real deals are still some way off, but the wheels are beginning to turn. By Daniel O'Sullivan.
Portuguese PPP in the health sector
In Portugal, the new recently elected centre right government has embraced an ambitious PPP program envisaging a profound renewal and modernisation of the decadent, demoralised and highly inefficient Health National Service. By Jorge Abreu Sim president, Partnerships Health Taskforce.
Tripping the light fandango
Light rail looks set for boom times in Europe, with several projects across Spain, Italy and Ireland progressing through tender and the prospect of more to yet to come in the same locations and also further afield. Revenue support for funders of these perennially problematic projects, via subsidy either upfront or through operation, remains however a key issue in determining bank appetite for the deals. By Daniel O'Sullivan.
Insurance matters
A quick look at any company's share price these days makes salutary reading but those in the general insurance sector, a sector not actually going bust, makes startling reading - Royal & Sun Alliance down from a yearly high of 428p to 92.5p and Zurich down from a yearly high of £194.66 to £55.50. Claims are up (due to turbines?) and investment income is down. Guess what? Insurance premiums have rocketed as a result of the sector's problems and the government and the private sector are as a result caught in a nasty vice which will test the idea of public private partnership. By Rod Morrison.
Managing risk in public private partnerships
There can be a variety of reasons why a construction project may fail especially one carried out under Public Private Partnership (PPP). A recent article in InfoRM (the journal of the Institute of Risk Management) examined underlying factors or motives causing risk in the construction and allied industries. These factors were termed risk drivers and at least fifteen were identified as being a "fundamental generic underlying cause influencing the kind, numbers, and levels of risks faced by construction projects". By Michael Walker, Executive Director and Head of the Risk Management Group at Currie & Brown Consulting.
