Mr. Eugene O'Callaghan:

Deputy Lawlor's first point related to the balance sheet. The National Pensions Reserve Fund or the Ireland Strategic Investment Fund, is a commercial investor and expects to make a return from all of its investments. The EUROSTAT treatment is off-balance sheet. There is no spending or depletion of State resources arising from the activities of the NPRF or the ISIF. Our activities up to now have been and will continue to be off-balance sheet in a sense that there is no increase to the deficit or the national debt arising from our activities. One of the proposed clauses in the new legislation that is currently being drafted is specifically to make that point, that we should endeavour to structure the activities so that they would not have a detrimental effect on the State's finances.

That point links with the Deputy's second question on PPP projects. The PPP projects are off-balance sheet and they do not add to the Government debt, purely because there must be more than 50% of private sector involvement in PPP projects in order for them to qualify as a PPP. Government or Government entities can only contribute up to 50% of the value of PPP projects, the other 50% must come from private sources. There is a genuine sharing of risk between the private sector and the public sector and EUROSTAT is happy because these are well developed rules that EUROSTAT oversees in terms of its auditing of Government accounting.

What that means is that for any PPPs in which the ISIF might be involved, its investment would need to be less than 50% of the total value and the remainder of the balance of more than 50% would need to come from third parties. Should there be any financing gaps in the financing of PPP projects or proposed PPP projects that would meet the cost-benefit criteria the Deputy has described, we would be ready and willing to participate in the projects in order to help bridge those gaps and allow the transactions to happen. We have done this in the case of a couple of PPPs. There was a schools bundle project in late 2012 and the N11 project, which was signed in the second quarter of 2013, in which the NPRF was involved in making a contribution as part of the overall transaction structure which enabled those projects to happen, and without us those projects would not have happened. We participated on a commercial basis to enable that to happen. That was all positive.

Where we see the bigger opportunity in the PPP market going forward is possibly more in the smaller PPPs rather than the larger ones. The larger PPPs typically have large international contractors and their large international financiers who are only interested in playing if they can write large cheques in particular projects. The larger ones and the one I have described that is closing shortly is a larger roads project where our money was not needed, but we would certainly see potential under the Government's stimulus package programme where there is a programme of PPP projects. Certainly, on the smaller to medium-sized projects there is every possibility that there will be financing gaps in those and we would certainly be very interested in participating in the projects where such gaps might exist.