The New Schools Privately Financed Project is known as a privately financed project (PFP). These are a form of public-private partnership - a more general term covering any contracted relationship between the public and private sectors to produce an asset or deliver a service.
PFPs have been developed and introduced extensively in the UK during the last decade. These have included the provision of improved school facilities.
PFPs involve the creation of an asset through private sector financing and ownership control for a concession period. They also involve the delivery of some services associated with the asset for a defined, but typically very long, period. The public sector may make monthly payments for the services throughout the contract period. The effect is that the initial capital cost is borne by the private sector and progressively reimbursed by the monthly payments.
Attraction of PFPs PFPs are attractive to private investors, contractors and governments for different but related reasons. Briefly: ■ income tax assessment legislation permits deductions to investors for early year losses, interest, fees and depreciation claims for private infrastructure projects ■ contractors can secure large ongoing contracts over a longer term than is possible with conventional tender work; they also have more scope to develop better designs ■ governments can achieve a number of objectives, such as simplifying management processes, lowering procurement costs and ensuring that assets are maintained. |