pounds 200m PFI road deal
Sunday 24 March 1996
The scheme will be part-funded by a pounds 165m, 25-year bond, which has been sold to institutions including the Prudential and Legal & General.
The new projects - upgrading the A1(M) motorway from Alconbury to Peterborough in Cambridgeshire and the A417/A419 Swindon and Gloucester bypasses - are the second and third under the Department of Transport's Design, Build, Finance and Operate (DBFO) version of PFI.
Under this, the winning Road Management Group consortium will be paid a "shadow toll" by the DoT based on traffic usage, once the roads are complete. RMG also includes Dragodos, a major Spanish toll road operator, and Brown & Root of the US.
"This is the first time that a private finance initiative has been funded through the capital markets, but it clearly marks the way forward," said John Watts, minister for railways and roads. "This indicates, certainly in the field of transport, that PFI is working."
It has hardly been plain sailing, however, and during the week builder John Laing became the latest to criticise complexities of the PFI. The biggest award so far, the pounds 3bn Channel Tunnel link last month, was also dubbed "the great state giveaway" by Labour after the DoT added pounds 6bn in sweeteners.
PFI awards elsewhere, notably in health, have been subject to severe delays.
The next DBFO scheme to be awarded will be the pounds 200m M1/A1 motorway link at Leeds. When all three tranches of contracts are awarded, 37 roads will be built at a cost of pounds 1bn despite severe roadbuilding cuts in the Government's latest spending round.
RMG beat the Connect consortium involving Balfour Beatty and Germany's Philip Holzmann for the A1 project and National Road Operators, which takes in Costain and P&O's Bovis, for the A417/A419.
One of the losers said: "Like other people we find the PFI process a lengthy and expensive one. We have no great interest, but it's not a complete waste of time otherwise we wouldn't bid."
Road operating responsibility will be handed over at the start of April and the structure of DBFO means the winners have an incentive to complete construction as soon as possible.
Over the 30-year life of the shadow toll contract, maintenance costs borne by RMG will take the total commitment to over pounds 285m. The DoT would not give details of tolls per vehicle and said building efficiencies meant PFI did not necessarily cost the taxpayer more.
Merchant bank Hambros is advising the Government on the DBFO schemes.
- 4 Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
- 5 New Tricks: Dennis Waterman to leave the show after a decade of crime-solving
Stamford Hill council removes 'unacceptable' posters telling women which side of the road to walk down
Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Ice Bucket Challenge: US firefighter Tony Grider dies after participating in charity craze near power lines
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Archbishop of Canterbury admits doubts about existence of God
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...