Birmingham's £2.2bn highways PFI delayed by another six months

Birmingham City Council’s long delayed £2.2bn Highways Maintenance PFI is facing another six months of delay, raising concerns that the scheme is facing a funding crisis.

Shortlisted bidders Amey and Birmingham Street Services, a consortium of Laing O’Rourke and Vinci, had been told a preferred bidder would be announced on December 19th . However in an 11th hour turnaround the council asked the two bidders to provide reassurances they could raise the necessary finances in the light of the banking crisis.

By this week only one bidder had provided the necessary reassurances, according to a council spokeswoman and the scheme has been put back until the summer. The spokeswoman declined to identify which bidder had yet to respond. Asked when the preferred bidder would be announced she told CJ that there was “no firm date”,  adding “we hope to announce a preferred bidder sometime in the summer of 2009.”

This is the second PFI scheme the council has halted recently. On December 12th  Birmingham’s £1.2bn Building Schools for the Future (BSF) scheme was put on ice, two days before the preferred bidder was to be announced. Catalyst Education and Land Securities PFI arm Trillium, which is currently being sold to Telereal, were asked to provide similar assurances on their funding arrangements. The council confirmed today the preferred bidder for the BSF scheme will be announced in early February.

One PFI contractor commented: “They can ask for all the assurances they want and might get them but that is no guarantee the funding will be in place six months down the line, come financial close. When it comes to finance, these days, its anybody’s guess.”

The Birmingham Highways PFI has been dogged with delay. In 2006 it was shelved for months by the incoming Conservative council. Last year it was delayed whilst the council sought additional public funding to meet the rising costs of the project.