I am satisfied with the transparency of the arrangements in place for public private partnership projects. As I said in a reply on 30 September 2003 to a similar question in this House, overall value for money in privately financed projects is assessed by comparing Exchequer cash flows under a more traditional procurement with the cash flows arising in the privately financed PPP tender. The private financing is an integral part of this assessment but one which is so significant it merits separate consideration. I established the National Development Finance Agency for this purpose. One of its functions is to advise on the optimal means of financing public investment projects. The NDFA brings financial expertise to this role and I have provided it with the necessary flexibility to carry out its functions and apply its professional judgment.
A State authority can contract with the private sector to build a facility while financing this itself at the cost of Government funds – currently about 4.3% for long-term money. That is the general test applied to the financing element of any alternative package. Alternatively, a State authority can seek an all-in package from the private sector which would include the design, construction and maintenance package and also a financing mechanism. In assessing whether such a package is good value for money many issues arise, including the comparative cost of funds, the degree of risk transfer, quality of product, maintenance quality and so on.
I intend that any additional cost associated with private finance will only be incurred where the overall value for money assessment warrants it. The NDFA will assess all proposed private financing packages on a case-by-case basis. Where non-Exchequer funding is to be used and in the opinion of the authority the overall cost of the private financing package is excessive, taking into account risk transfer factors, it may offer NDFA financing in its place. It will be a matter for the relevant State authority directly concerned with a project to decide which package to accept after reflecting on NDFA advice. All PPP projects are subject to the normal rules of accountability and scrutiny, including audit by the Office of the Comptroller and Auditor General and accountability to this House via the Committee of Public Accounts and other relevant Dáil and joint Oireachtas committees.