In February 2004, Eurostat published guidelines regarding the accounting treatment of PPP projects for the purpose of calculating the General Government Balance (GGB). In general, the position in this regard is that the assets of privately financed PPP projects will be off balance sheet in the National Accounts and therefore the construction costs will not affect the GGB upfront over the construction period, provided that the private sector partner carries the Construction risk and carries either the Demand or the Availability risk. The unitary payments which are made under the PPP contract will count as GGB expenditure in the years in which they are incurred over the life of the project.
Projects whose capital cost will impact on the GGB over the construction period include:
Design, Build, Operate, Finance (DBOF) projects where the public sector partner carries the majority of the risk in relation to a project. This includes cases where the public sector carries the construction risk or carries both the availability and demand risk.
Design, Build, Finance (DBF) projects where the contract is similar to a finance lease.
Design, Build, Operate (DBO) projects.
Conventional public procurement projects.
The CSO is responsible for determining how various PPP projects should be classified in accordance with Eurostat rules. I would like to point out to the Deputy that the "off balance sheet" status of a project is not the fundamental rationale for pursuing PPP projects. The main driver for PPPs is to achieve value for money for the Exchequer.