Dail Question No: 201
To ask the Minister for Public Expenditure and Reform the rationale for imposing the rule that the total cost of PPPs, including up front direct exchequer costs, must be limited to 10% of the total annual exchequer capital spending; if he has reviewed this rule and if he will consider revising the rule; and if he will make a statement on the matter.
- Dara Calleary.
* For Written answer on 06/04/2017
Ref No: 17354/17
Reply
Minister for Public Expenditure and Reform (Paschal Donohoe):
PPPs offer an alternative model for delivering infrastructure that can be effective in particular circumstances.However, the long-term nature of the financialcommitments arising under PPPs require that the use of such arrangements must be carefully planned in order to ensure that they are used to address infrastructural needs in a manner that is sustainable in the long term and which the public finances can afford.
It was for this reason that the Government introduced an Investment Policy Framework for PPPs in 2015. The purpose of the framework was to set a limit onthe extent to which the annual costs of PPPs wouldpre-commitcapital funding available to future Governments forinvestment purposes,in terms ofthe overall aggregate Exchequer capital allocation projected to be available in any individual year.
The framework applies to the future cost of unitary payment charges in respect of both existing PPPs already in place and new PPPs currently in procurement or planning, together with the up-front Exchequer costs associated with procuring the planned new PPPs. The current requirement is that, taken together, such future costs in respect of PPPs should not pre-commit more than 10% of the overall aggregate capital funding projected to be available to future Governments in any individual year.
In the context of the mid-term review of the Capital Plan, I have asked my Departmentto consider the scope for further use of PPPs to complement the direct provision of infrastructure using Exchequer funding, on a basis that is sustainable and affordable in the long term. A senior level group has been established, comprisingrelevant officials from the Departments with experience of procuring projects by PPP, together with the Department of Finance, the National Development Finance Agency and Transport Infrastructure Ireland, to review past experience ofPPPsand to provide an evidence based analysis of the potential for further use of PPPs(and concessions) as a procurementoption forthe delivery of capital infrastructure. The terms of referenceof this Groupincludes consideration of existingPPP guidance and governance which encompasses the investment policy framework for PPPs set outabove.