Balfour Beatty: UK PFI is not dead

Anthony Rabin, the UK infrastructure developer’s deputy chief executive, believes PFI will see a ‘hiatus’ of about 18 months but will eventually be reborn in a ‘mutated form’ that may be more complex. He also expressed skepticism about infrastructure investment opportunities in the US.

Despite rampant criticism of the UK’s private finance initiative, investment in infrastructure through this scheme is not dead and will be reborn in a different form, a senior executive of UK infrastructure developer Balfour Beatty said today.

“I do not believe that PPP-, PFI-type infrastructure has had its day,” Anthony Rabin said at the Infrastructure Investor: Europe forum in Berlin.

He added that PFI-type investments will be reborn in a different form once the UK government reviews the PFI programme and makes up its mind on how to proceed with it in the future: “my own view is that we’ll have a hiatus of about 18 months while the government takes stock, not dissimilar to 1997, when Labour took office,” Rabin said.

“After that, a mutated form of private sector investment in social infrastructure will emerge, rebranded and possibly in a more complex form. This will introduce mixed schemes, and income risk that will have to be managed by project promoters,” he added.

Turning to other geographies where Balfour Beatty is actively pursuing PPP opprtunities, Rabin was more skeptical on the US market. He cited the difficult political climate facing President Barack Obama’s high-speed rail programme as one reason for his skepticism. In February, Republican Florida Governor Rick Scott became the third US governor to reject Federal high-speed rail funds granted to states under President Obama’s high-speed rail programme, turning away $2.4 billion Florida won for its Tampa to Orlando rail project.

“The realisation that private finance is not free money has led to cancellation of that particular high-speed rail project,” Rabin said. “This is personally disappointing, as I would have been keen to combine our US rail, civil engineering and investment capabilities in a flagship project such as this.”

“However, north of the border in Canada, we do see opportunities for both transportation and social infrastructure investment,” Rabin added, praising Canada’s PPP model.