Latest:
Privatisation of PFI task force
00:00 28 Jul 1999
|
by Carol Millett
Government plans to privatise the Treasury's private finance initiative task force met with a mixture of qualified support and outright suspicion from the PFI sector this week.
The privatisation is the central recommendation of Sir Malcolm Bates' review of the task force published last week. It will transform the task force into a private sector-led project management team, known as Partnerships UK, which will help Government departments design, negotiate and finance PFI proposals. It will also occasionally take equity stakes and arrange debt finance in PFI projects which have difficulty finding private sector funding. (See also page 2.)
The Government will have a 49 per cent stake. It will have a start-up capital of £20 million and is expected to increase to £1 billion as the enterprise matures.
The Major Contractors Group (MCG) gave its "qualified support." MCG chief executive Jennie Price said: "The public sector needs better procurement and project management skills in PFI and this is a creative way of providing those. It is difficult to maintain and foster those skills in the public sector but they must ensure that they get high quality people and take care that the range of financial products offered doesn't undermine the existing market. We are also concerned that in the interim period, there is no hiatus on existing deals created by departments standing back and waiting for Partnerships UK to be set up."
However, a leading PFI banker said: "What has this really been set up to do? Is it a bank or a project management team or an advisory service? If it isn't a bank, why aren't there any project management or advisory services on the steering group? And what happens if a Partnerships UK shareholder is in a bidding consortium for a PFI deal put together by Partnerships UK? How can we be sure there'll be no bias and what sway will it have in the market? Will bidders be picked because they have good relationship with Partnerships UK?"
PFI lawyer Tim Steadman of Clifford Chance said: "At the moment it is hard to guess the problem for which Partnerships UK offers a solution. There are also a series of perceived conflicts of interest but perhaps this will all be sorted out during the consultation period."
Government plans to privatise the Treasury's private finance initiative task force met with a mixture of qualified support and outright suspicion from the PFI sector this week.
The privatisation is the central recommendation of Sir Malcolm Bates' review of the task force published last week. It will transform the task force into a private sector-led project management team, known as Partnerships UK, which will help Government departments design, negotiate and finance PFI proposals. It will also occasionally take equity stakes and arrange debt finance in PFI projects which have difficulty finding private sector funding. (See also page 2.)
The Government will have a 49 per cent stake. It will have a start-up capital of £20 million and is expected to increase to £1 billion as the enterprise matures.
ADVERTISEMENT
The Major Contractors Group (MCG) gave its "qualified support." MCG chief executive Jennie Price said: "The public sector needs better procurement and project management skills in PFI and this is a creative way of providing those. It is difficult to maintain and foster those skills in the public sector but they must ensure that they get high quality people and take care that the range of financial products offered doesn't undermine the existing market. We are also concerned that in the interim period, there is no hiatus on existing deals created by departments standing back and waiting for Partnerships UK to be set up."
However, a leading PFI banker said: "What has this really been set up to do? Is it a bank or a project management team or an advisory service? If it isn't a bank, why aren't there any project management or advisory services on the steering group? And what happens if a Partnerships UK shareholder is in a bidding consortium for a PFI deal put together by Partnerships UK? How can we be sure there'll be no bias and what sway will it have in the market? Will bidders be picked because they have good relationship with Partnerships UK?"
PFI lawyer Tim Steadman of Clifford Chance said: "At the moment it is hard to guess the problem for which Partnerships UK offers a solution. There are also a series of perceived conflicts of interest but perhaps this will all be sorted out during the consultation period."
ADVERTISEMENT
Most Viewed Articles
ADVERTISEMENT