Dáil Éireann Debate, Tuesday - 1 May 2018
112. Deputy John Lahart asked the Minister for Public Expenditure and Reform the details of the PPP projects in the water sector; the cost of each; and his plans to begin posting these details on the Government's PPP website in the interests of greater transparency as recommended by the Oireachtas Committee on Budgetary Oversight. [18758/18]
Amharc ar fhreagra113. Deputy John Lahart asked the Minister for Public Expenditure and Reform the estimates of PPP expenditure in the context of multi-annual capital allocations in respect of the period 2018 to 2021 (details supplied); and if he will make a statement on the matter. [18759/18]
Amharc ar fhreagra115. Deputy John Lahart asked the Minister for Public Expenditure and Reform the reason the major PPPs in the water sector are not included on the Government's PPP website; and if he will make a statement on the matter. [18777/18]
Amharc ar fhreagraI propose to take Questions Nos. 112, 113 and 115 together.
A Public Private Partnership (PPP) is an arrangement between the public and private sector for the purpose of delivering infrastructure or services which were traditionally provided by the public service. In effect, it is a form of procurement available to the public sector.
There are a number of different PPP models which can be used, including:
1. Projects financed by the private sector and remunerated by deferred annual payments (Unitary or Availability Payments) from the Exchequer e.g., Design, Build, Operate & Finance (DBOF); or Design, Build, Operate, Maintain and Finance (DBOMF);
2. Projects partly or fully financed by the private sector and remunerated by user charges, mainly in the roads area (DBOF with a Concession to levy user charges for a period); and
3. Projects funded from State Authorities own resources, mainly in the local authority area (e.g., Design, Build & Operate/Maintain).
When referring to PPPs, we generally mean projects in category (a) or (b) above, whereby the asset is funded and constructed by the private partner, following which it is made available for public use and is paid for by the State and/or users over an extended period (typically 20-25 years), after which the asset comes into State ownership. In the meantime, the PPP is regarded as ‘off balance sheet’ from a General Government perspective, which means that the initial capital cost of the project does not impact on the General Government Balance (GGB) over the construction period, nor does the debt associated with the project impact on General Government Debt (GGD). Rather, the cost of such projects is spread over the lifetime of the projects, by way of annual unitary payments.
These are the projects that are reported on annually by my Department on the ppp.gov.ie website - on the basis that these are the PPP projects which have not been recorded on the balance sheet of the Government and so constitute a future contingent liability for the State. Such contingent liabilities pose a potential risk for the Exchequer, in terms of a potential future GGB/GGD impact were they to be terminated and surrendered to the Exchequer earlier than anticipated, thus requiring a reclassification as on-balance sheet at that time. For this reason, these contingent liabilities must be reported to Eurostat, via the Central Statistics Office, on an annual basis. Accordingly, it is appropriate that such contingent liabilities associated with PPPs be carefully monitored and reported on.
On the other hand, the projects pursued under category (c) above have been fully funded by the Exchequer and are already classified as on-balance sheet in General Government terms. Such projects are not generally regarded as ‘classic’ PPPs and there are no contingent liabilities associated with them as there is no risk of a potential future GGB or GGD impact associated with such projects, since they are already on-balance sheet (unlike ‘classic’ PPPs). On this basis, we do not record these projects on the PPP.gov.ie website, nor do I propose to change this approach.
Since 1 January 2014, Irish Water now has statutory responsibility for all aspects of water services planning, delivery and operation at national, regional and local levels, and this included taking on responsibility for the water related ‘PPPs’ from the local authorities. Details of the PPP projects in the water area would therefore be available from Irish Water.
In relation to the PPP related expenditure that is provided for in the context of the multi-annual capital allocations now agreed for the period 2018 to 2022, my Department is in the process of producing a detailed breakdown of this information to be published soon.
Chapter 6 of the NDP included a section on the PPP review which stated that, in order to improve transparency in reporting on PPPs, a number of changes in the reporting arrangements for PPPs were recommended by the Review Group. One of the improvements in reporting being introduced on foot of these recommendations is that the table published by my Department on the ppp.gov.ie website will, in future, include details of the PPP unitary payment charges for each individual project by year, until such time as the project is handed back by the PPP Company to the Sponsoring Authority. Officials in my Department are currently compiling the required data in conjunction with the responsible Departments and it is expected that the new reporting arrangement will be in place and the data published on the PPP website soon.
These new arrangements will address the suggestion of the Parliamentary Budget Office that future PPP commitments be disaggregated and that clarity be provided on the amount of the total capital allocations for 2018-2021 that will be required to fund such commitments - but in respect of all future years and not just the period 2018-2021.
