Paragraphs 3.1 and 3.2 | 13 Refinancings are complex financial arrangements. Departments will need to consider the implications of refinancings on a project by project basis. There are, however, principles which should guide departments and strategies which can help departments apply the principles. They are that: |
| ■ appropriate benefits should go to those bearing risks; |
| ■ benefits from reducing costs in a developing market should be shared if they have not already been reflected in the contract price; |
| ■ it is reasonable for departments to seek compensation for any increased exposure to termination liabilities arising from a refinancing; |
| ■ substantial refinancing gains to the private sector may threaten the perceived value for money of the project; |
| ■ a refinancing should not jeopardise the stability and success of the long term contractual relationship between a consortium and a department; and |
| ■ if the private sector seeks to improve its returns by renegotiating parts of a PFI contract it is reasonable for departments to seek a share of refinancing benefits. |