“Public financing requirements are shifting and PF2 will not be high on the current UK Government’s agenda in 2015. The National Infrastructure Plan highlights the government’s infrastructure priorities and, for investors, the primary focus is on energy projects, such as nuclear and offshore wind. There is still no centrally driven pipeline of local PPP projects to boost the UK economy and in which to invest. This is despite the previous success of the PPP model, and a real need in the affordable housing sector particularly for elderly and vulnerable citizens. The role of the Local Enterprise Partnerships will be increasingly important together with the devolution of power to the cities.
For investors, money will inevitably gravitate to countries such as Canada, Australia and emerging markets, such as Colombia and the Philippines, where there are strong pipelines and a real commitment to using project finance to deliver public infrastructure projects.
Australia and Canada continue to be good markets for PPP but governments in emerging markets such as Tanzania, India, the Philippines, Indonesia, and Colombia are increasingly taking the lead from the developed world in utilising private investment models to fund public infrastructure development. They are opening up their markets to overseas investment and foreign contractors; improving legal and regulatory requirements as they look to address inadequate infrastructure or fill skills and funding gaps.
These countries are embracing PPP in ways that the UK is not; demonstrating a long-term commitment to the PPP model and a significant pipeline of PPP infrastructure projects, a trend we expect to see continuing in 2015.”
Liz Jenkins is a partner at London-headquartered law firm Clyde & Co.