Treasury announces lending to PFI projects

03 March 2009

The Chief Secretary to the Treasury, Yvette Cooper, today announced that Government will lend to Private Finance Initiative projects that cannot raise sufficient debt finance on acceptable terms, lending alongside commercial lenders and the European Investment Bank. It will also be able, where necessary, to provide the full amount of senior debt required by a project. The chief objective of this initiative is to ensure that infrastructure investments that the Government has planned do not stall as result of current credit market conditions.

This initiative will enable the structure of PFI projects and the allocation of risk within them to be maintained. The Treasury will use professional lending skills, and intends to lend to projects only where appropriate funding is not available from the market. It will be a temporary intervention. The Treasury envisages selling the loans it makes when favourable market conditions return.

All PFI projects that have, to date, issued a notice in the Official Journal of the European Union (OJEU) and not yet reached financial close will be eligible for this finance from the Government. Future projects intending to go to market soon will also be eligible, provided they meet the usual value for money and affordability criteria, and subject to Treasury approval before issuing their OJEU notice. Click here for full Treasury statement.

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