Gerard Murphy
Question:50 Mr. Murphy asked the Minister for Finance the changes he plans to make in the PPP process to achieve the new targets for expenditure. [2536/05]
View answerTuesday, 1 February 2005
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Written answers
PPPs are part of the overall strategy to deliver on investment priorities. The Government is committed to developing the PPP process as a viable procurement option for appropriate projects. There has been good progress on PPPs overall since the first group of pilot projects were announced in 1999. Reasonable deal flow has been established in the roads and environment areas but progress in projects remunerated by unitary payments from the Exchequer has been slower. We are still learning and continue to keep our processes and procedures under review.
The multi-annual capital envelopes introduced in budget 2004 set ambitious targets for PPP/National Development Finance Agency, NDFA, funded investment. After the first year of operation, it was clear that not all of the first set of targets for PPPs to be remunerated by unitary payments would be met in the short-term. There are a number of reasons for this, including the complexity of the process and a lead time of 18 months to two years involved in bringing PPP projects to construction.
Adjustments to the targets were made in budget 2005 to take account of the shortfall in 2005 and to accommodate the situation in the short to medium-term. The total 2005-09 PPP/NDFA allocation, remunerated by unitary payments from Departments' Votes is €3.675 billion; in addition, a target of €1.195 billion for PPPs remunerated by user charges has been set.
PPPs should not replace traditional methods where these are considered more suited to the individual project or projects under consideration. The PPP procurement option, however, has an important role to play when applied to appropriate projects where there is the right scale, risk and operational profile to harness the benefits of this new approach. PPPs are acknowledged to be complex, involving, as they do, a long-term financial commitment for both the private and public sector partners for a period of anything up to 30 years. The challenge going forward is to ensure that the appropriate skills and capacity are in place, together with balanced and proportionate procedures for appraisal, assessment and evaluation of proposals, which would facilitate the selection of PPP projects offering quality public services, value for money and timely delivery. In that context, my Department is currently actively considering what changes, if any, are appropriate.