1 Obtaining the Composite Solution was an immense challenge and success was not guaranteed. Largely due to vulnerability caused by high levels of indebtedness and the severe downturn in traffic following September 11th, NATS went through 18 months of disruptive uncertainty in order to deliver a solution which was robust and worked for all parties. Departments planning PPPs with their advisers should be aware of the implications of introducing complexities, tensions and interdependencies into corporate and financial structures, which could reduce value for money.
2 A business' own management team will generally be in a better position to understand the risks to the business than outsiders. The financial structure of a PPP should be shared and discussed with the company's management, and where relevant, the economic regulator, before it is finalised. Departments need to balance this against the conflict of interest which management have in pushing for a more conservative financial structure, and possible impacts on sale proceeds.
3 Testing of the robustness of a PPP should give particular consideration to the evaluation of those risks where the management cannot control the risks' occurrence and can only mitigate the effects.
4 Departments should ensure that PPPs are established with sufficient and freely accessible reserves, in the light of identified risks. It may not always be efficient to provide freely accessible reserves against risks that have been soundly evaluated as very unlikely, particularly if refinancing the business is likely to be a quick and straightforward alternative.
5 Where capital intensive businesses like NATS, that are particularly exposed to international shocks, are to have to their prices regulated, automatic mechanisms to share the risk of volume change with customers should be considered.