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Entire PPP funding mechanism in serious doubt

  • 22-03-2010 9:48pm
    #1
    Registered Users Posts: 4,985 ✭✭✭ Chris_5339762


    Well I guess thats that then. If this happens, forget about -

    M17/18
    N7/M11
    M11/N25
    M20
    Dart Interconnector
    Metro North
    Metro West
    etc
    Government to discuss cuts in capital spending
    21 March 2010 By Pat Leahy, Political Editor

    The government is to discuss significant cuts to its programme of capital spending - including the future of the planned Metro North project - when it considers a Department of Finance report on the capital investment programme shortly.

    Political sources said that the finance report might be considered as early as this week. It is understood to contain criticisms of the system of public private partnerships (PPPs) to fund capital investment, and recommends that better value can be achieved for a variety of big spending projects. It is likely that the use of PPPs in future will be greatly restricted.

    The future of one large PPP, however, remains unclear. The Metro North project, linking Dublin City Centre with Swords via Dublin Airport, has yet to receive the final go ahead from government. Political sources said that the future of the project, which has a price tag estimated at €5 billion, is likely to be the subject of division at cabinet level.

    Department of Finance officials are thought to be opposed to the project, although it is not clear if finance minister Brian Lenihan will heed their advice. Green Party ministers are strongly in favour of Metro North, and Eamon Ryan, the Minister for Communications, Energy and Natural Resources, has frequently spoken in favour of the project.

    Ciaran Cuffe, the Green TD in Dun Laoghaire, said that the Metro was a ‘‘must-have’’ project for the party.

    However, another party source speculated that the project could be at least postponed until the public finances showed some improvement.

    http://www.sbpost.ie/news/ireland/government-to-discuss-cuts-in-capital-spending-48074.html
    Tagged:


Comments

  • Registered Users Posts: 8,421 ✭✭✭ Danno


    Why not have a system whereby the investor gets payed a fixed sum. Say Mr Investor trumps up €100m for a bypass. The bypass gets tolled. A big electronic board shows lets say a €130m countdown. Every €2 a motorist pays to use the bypass, the electronic board deducts the €2 from the remaining total - with the toll booths going when €0 is reached. Result: Everybody is happy.


  • Registered Users Posts: 11,907 ✭✭✭✭ Kristopherus


    +1 But then to get the current shower to leave their spend,spend,spend mindset behind will be the biggest problem. I dont think a sensible suggestion like yours would be even in the capabilities of them.


  • Moderators, Society & Culture Moderators Posts: 32,254 Mod ✭✭✭✭ The_Conductor


    Danno wrote: »
    Why not have a system whereby the investor gets payed a fixed sum. Say Mr Investor trumps up €100m for a bypass. The bypass gets tolled. A big electronic board shows lets say a €130m countdown. Every €2 a motorist pays to use the bypass, the electronic board deducts the €2 from the remaining total - with the toll booths going when €0 is reached. Result: Everybody is happy.

    Fianna Fails version of this- is when the balance due to the PPP investor reaches a low level, they are approached and convinced to hand over another EUR100m (or whatever amount) and their rental income from the infrastructure they funded gets extended for another 10 years (or whatever). Look at the M50 toll bridge saga........


  • Registered Users Posts: 1,419 ✭✭✭ Cool Mo D


    Danno wrote: »
    Why not have a system whereby the investor gets payed a fixed sum. Say Mr Investor trumps up €100m for a bypass. The bypass gets tolled. A big electronic board shows lets say a €130m countdown. Every €2 a motorist pays to use the bypass, the electronic board deducts the €2 from the remaining total - with the toll booths going when €0 is reached. Result: Everybody is happy.

    But they might not be happy. Say the investors put up €500 million for a project, in the promise that they would be repaid €600 million. If they got their money back in 2 years, that would be a 9.55% return per annum, which would be a pretty great investment, especially if it was government backed, and hence, risk free.
    However, if it took 10 years for them to get their €600 million, that would be equivalent to 1.84% return per annum, and they would have been way better off putting their money in the bank.
    So basically, to attract investors, you must give some kind of assurance as to what returns you'll provide, or they'll take their money elsewhere. It's not good enough to say that they'll get there money at some point in the future - money has a value in time, and €500 million today is worth a lot more than €500 million 10 years from now.


  • Closed Accounts Posts: 115 ✭✭ 123easy


    Well I guess thats that then. If this happens, forget about -

    M17/18
    N7/M11
    M11/N25
    M20
    Dart Interconnector
    Metro North
    Metro West
    etc

    l

    In my view, you being most overdramatic the above mentioned road schemes are going ahead via PPP maybe the M20 and the metro will be binned/postponed. The beauty of PPP is that construction costs do not go down on the books as national debt.


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  • Closed Accounts Posts: 20,011 ✭✭✭✭ Run_to_da_hills


    Danno wrote: »
    Why not have a system whereby the investor gets payed a fixed sum. Say Mr Investor trumps up €100m for a bypass. The bypass gets tolled. A big electronic board shows lets say a €130m countdown. Every €2 a motorist pays to use the bypass, the electronic board deducts the €2 from the remaining total - with the toll booths going when €0 is reached. Result: Everybody is happy.
    They could also have another big electronic board beside it going the oposite way totting up the national debt. :eek:


  • Moderators, Society & Culture Moderators Posts: 32,254 Mod ✭✭✭✭ The_Conductor


    123easy wrote: »
    In my view, you being most overdramatic the above mentioned road schemes are going ahead via PPP maybe the M20 and the metro will be binned/postponed. The beauty of PPP is that construction costs do not go down on the books as national debt.

    Its all smoke and mirrors- as the taxpayer will pay come what may, at the end of the day. In any event- surely roadtax is supposed to be a payment for using the national roads of the country? The M50 is as far as I know the only orbital road around any EU capital city, that is tolled. Its one thing to use PPP schemes as an off-book method of funding infrastructure projects- however when its taken to the extent that the Irish government have done- it begins to take the piss.


  • Closed Accounts Posts: 115 ✭✭ 123easy


    smccarrick wrote: »
    Its all smoke and mirrors- as the taxpayer will pay come what may, at the end of the day. In any event- surely roadtax is supposed to be a payment for using the national roads of the country? The M50 is as far as I know the only orbital road around any EU capital city, that is tolled. Its one thing to use PPP schemes as an off-book method of funding infrastructure projects- however when its taken to the extent that the Irish government have done- it begins to take the piss.


    Quite true! but as long s they keep building roads and providing employment who cares!:D


  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 61,064 Mod ✭✭✭✭ L1011


    smccarrick wrote: »
    Its all smoke and mirrors- as the taxpayer will pay come what may, at the end of the day. In any event- surely roadtax is supposed to be a payment for using the national roads of the country? The M50 is as far as I know the only orbital road around any EU capital city, that is tolled. Its one thing to use PPP schemes as an off-book method of funding infrastructure projects- however when its taken to the extent that the Irish government have done- it begins to take the piss.

    M25/A282.... nearest EU capital city to us and all!


  • Registered Users Posts: 8,421 ✭✭✭ Danno


    Cool Mo D wrote: »
    But they might not be happy. Say the investors put up €500 million for a project, in the promise that they would be repaid €600 million. If they got their money back in 2 years, that would be a 9.55% return per annum, which would be a pretty great investment, especially if it was government backed, and hence, risk free.
    However, if it took 10 years for them to get their €600 million, that would be equivalent to 1.84% return per annum, and they would have been way better off putting their money in the bank.
    So basically, to attract investors, you must give some kind of assurance as to what returns you'll provide, or they'll take their money elsewhere. It's not good enough to say that they'll get there money at some point in the future - money has a value in time, and €500 million today is worth a lot more than €500 million 10 years from now.
    €100m pure profit - the greedy bints.


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  • Registered Users Posts: 17,099 ✭✭✭✭ kippy


    Time to look at the NPRF for this kind of investment.
    Invest the NPRF fund into infrastructure - toll the investment for a number of years etc etc.

    Now if only we hadnt put the whole of the NPRF into the bank bailouts.......


  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 61,064 Mod ✭✭✭✭ L1011


    Was only in the papers days ago that the NPRF was to investigate funding domestic PPPs. We haven't put anything close to the entire thing in to the banks.


  • Registered Users Posts: 17,099 ✭✭✭✭ kippy


    MYOB wrote: »
    Was only in the papers days ago that the NPRF was to investigate funding domestic PPPs. We haven't put anything close to the entire thing in to the banks.

    I must have missed that report, its something I've wanted to see happen for ages and I mean ages. I would rather keep the "profits" from these schemes in the pockets of the taxpayer than in the pockets of a select few.
    I'll have a look online for the articles, can you remember what publication?

    I'd say we've put a significant amount into the banks (when you take into account the need for the next 12 months when further recapitalisation will be required)


  • Registered Users Posts: 1,275 ✭✭✭ slinky2000


    I can't wait for the toll on the m7 to open.

    So for me to go from shannon side of Limerick to Belfast there are 4 tolls great

    Any tolls in the north ......... nope


  • Closed Accounts Posts: 20,011 ✭✭✭✭ Run_to_da_hills


    slinky2000 wrote: »
    I can't wait for the toll on the m7 to open.

    So for me to go from shannon side of Limerick to Belfast there are 4 tolls great

    Any tolls in the north ......... nope
    You will just have to learn how to avoid them. :)

    I presume if you leave at Mountrath and join it again at Roscrea, just watch for cops, the speed limit will more than likely be reduced to 80kph.

    I avoid tolls at all cost. e14 is a lot of cash to pay out for one trip, (Commercial van) thats three pints in a country pub. :)


  • Moderators, Science, Health & Environment Moderators Posts: 4,409 Mod ✭✭✭✭ spacetweek


    slinky2000 wrote: »
    I can't wait for the toll on the m7 to open.

    So for me to go from shannon side of Limerick to Belfast there are 4 tolls great

    Any tolls in the north ......... nope

    Right, no road improvements for you then.


  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 61,064 Mod ✭✭✭✭ L1011


    slinky2000 wrote: »
    Any tolls in the north ......... nope

    Does the North have inter urban motorways? No.
    Does the North have dual carraigeway/motorway bypasses of its cities involving extremely expensive infrastructure? No.

    I'm sure if they did, they'd have tolls too. However, all they've is got a small, crumbling, 40 year old motorway network the British paid for as a willy-waving exercise.


  • Moderators, Society & Culture Moderators Posts: 32,254 Mod ✭✭✭✭ The_Conductor


    MYOB wrote: »
    all they've is got a small, crumbling, 40 year old motorway network the British paid for as a willy-waving exercise.

    And by god- we were jealous as hell of it at the time.......


  • Registered Users Posts: 4,985 ✭✭✭ Chris_5339762


    Circumcised willy possibly, as they only built a little bit of it.


  • Closed Accounts Posts: 3,032 DWCommuter


    MYOB wrote: »
    Does the North have inter urban motorways? No.
    Does the North have dual carraigeway/motorway bypasses of its cities involving extremely expensive infrastructure? No.

    I'm sure if they did, they'd have tolls too. However, all they've is got a small, crumbling, 40 year old motorway network the British paid for as a willy-waving exercise.

    I like that!


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  • Closed Accounts Posts: 3,032 DWCommuter


    smccarrick wrote: »
    And by god- we were jealous as hell of it at the time.......

    And I like that even more!


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