A prosperous New Year?
As Christmas approaches, minds inevitably turn towards presents. And while Santa’s sack has been rather barren for the PPP market over recent years, the new year could bring a healthy pipeline of opportunities this time around.
‘Feast or famine’ has perhaps been the perfect moniker for the UK infrastructure industry over the last decade – from the highs of the mid-2000s to the lows (and cuts) of 2010 and beyond. But rumours of a return to using PF2 in the wake of the latest Spending Review, plus the changes to the way infrastructure is administered from the centre with the creation of the National Infrastructure Commission, means that hope is starting to well up once more.
And Scotland has had an early Christmas present of its own, with the Office for National Statistics giving its modifications to the Hub and non-profit distributing models the all-clear for off-balance sheet treatment.
Moreover, the whole debate in Europe is moving more and more towards private finance in the procurement of public infrastructure. The Juncker plan to get more projects moving is based largely on the idea of bringing public and private sectors together, suggesting opportunities from that programme are bound to come forward in the coming 12 months.
There has been something of a trickle so far, but it could be a flood when all sides get to grips with it. Germany, with some serious infrastructure needs that it is only now starting to acknowledge, could well be at the forefront of that.
A similar shift in the debate appears to have emerged in north America, where the US has had a rather frustrating 2015. While still being far from ready to fulfil its huge promise, there are at least signs emerging of a fresh thaw in relations between elected officials and the P3 industry.
Deals in many states have a more encouraging environment than a year ago – and they will be helped by a recent decision in Virginia, where the I-66 road project has been given the go-ahead to develop as a P3. Once at the cutting edge of the P3 industry, Virginia was one of those states that seemed to be losing its commitment to the model, so the decision on the I-66 is another welcome Christmas present that will go a long way to shore up confidence across the nation.
Meanwhile, Canada has a new government that although initially appearing cool on PPPs, still looks set to use the model as an important tool in its efforts to drastically expand infrastructure spending.
Speaking of seeing PPPs as important tools, New Zealand’s government is another that has recently emphasised its support of the PPP model. After a privatisation contract was cancelled, Corrections Minister Sam Lotu-Iiga was quick to insist that it remains committed to PPPs.
So there is clearly much positivity around PPPs across the globe at the moment. 2016 will be the time for the industry to capitalise on that.