French infrastructure group Vinci has won approval from the Isle of Wight Council to carry out road maintenance on the island for the next 25 years.
The deal also calls for other services, such as street lighting, cycleways, network maintenance, highway design, street cleansing and revamping the island’s CCTV network, among others.
A significant part of the financing for the £1.2 billion (€1.5 billion; $1.9 billion) contract will come from a government grant of up to £487 million. The Isle of Wight authorities will also contribute some £7 million a year over the lifetime of the contract, which seeks to refurbish the bulk of the island’s roads within the first seven years at an annual cost of £20 million.
The Isle of Wight Council added that “inflation of 2.5 percent had been built into the contract with the ability to pay up to 8.5 percent inflation in year eight”. The contract also includes a clause implementing a profit-sharing mechanism with the island authorities in case of future equity sales.
The Vinci team and the island government are expected to sign the highways Project Finance Initiative (PFI) contract by the end of September.
Earlier this year, Vinci also won an £800 million contract from the London Borough of Hounslow Council to refurbish some 432 kilometres of roads and 763 kilometres of pavement.