There is scope to improve the compilation of information on the financing of PFI projects and the returns to investors

3.13  All authorities receive information about the financing arrangements of their PFI project companies when the companies bid for the contract and when the companies seek the authorities' approval for a refinancing. In addition, standard contract guidance on rights to information, which has been present in contract guidance since the first version in 1999 and has been expanded in December 2005 guidance, gives authorities the right to further information available to the lenders. In total, this information helps departments and the Treasury to keep track of financing terms available on PFI deals and should help them to monitor the ongoing financial position of the PFI project companies. Current expectations are that the increase in sources of equity arising from the emerging PFI secondary market should drive down returns which equity providers seek from PFI projects and that debt finance should continue to be provided at competitive rates reflecting the lower risks now that the PFI market is established. However, the Treasury has not published a summary of the current trends in PFI financing terms across the PFI sector.

3.14  Although authorities should, therefore, have information on the current financing structure of their PFI project companies, many of the project teams that we surveyed had difficulties in providing this information. 20 PFI project teams, out of 123 surveyed, did not return our questionnaire despite repeated reminders. In a follow up survey to obtain further information on refinanced projects requested by the PAC, including the current investor internal rate of return, 16 out of 36 projects provided no information or incomplete information.

3.15  Partnerships UK launched in 2005 a database of PFI projects which includes available information on the financing of PFI projects and the extent of refinancing activity, although considerable further work is needed to make aspects of this information accurate and comprehensive. In order to complete this work, Partnerships UK will require the support of the authorities. The results of our survey are being made available to Partnerships UK to enable them to improve the accuracy of data they had been compiling on completed refinancings.

3.16  The authorities we surveyed would not normally receive updated information on the profits or losses which investors may derive from selling shares in PFI project companies; this information is not disclosed to authorities because it is a contract between two private sector parties. Such information, together with further information on the full range of costs and benefits which investors experience from participating in the PFI market, would provide greater transparency, an insight into the balance of risks and rewards which the private sector experience from entering into PFI projects, and a better understanding of the dynamics of PFI equity investment.