Dr. Dónal Palcic:

Yes. Once it is out of contract that could be the case. It is very hard to see. It is the complexity that is key, as Professor Reeves mentioned earlier. In a more State controlled or State-led approach, one is better able to deal with that complexity, having to negotiate contracts for all of these things and arrange PPPs. Even for roads, which is easier infrastructure in that it will be a motorway and there will be a certain value at the end of it, that is still a complex contract and there are a lot of complexities around it in calculating value for money, the PSB, etc. In this type of contract, in a fast moving sector, with technology and competition changing, there is so much extra complexity on top of what we would normally see with a PPP. Earlier people asked what would the economic or residual value. Maybe I would be too glib if I said it would down, and I am not saying it would be. A lot of the value would come down to the competitive process.

The NBS review suggested that the subsidy to be paid would be a mixture of the costs, revenues, strategic value and final economic value. Bidders will have to come up with figures for what they believe that final value will be, what the strategic value of their ownership of the asset will be, what the revenues will be and what the costs will be. The subsidy to the Government will need to be worked out with the complex interplay of these factors in mind. When there is just one bidder, though, and it is not under competitive pressure to be more realistic about future demands and, therefore, revenues, attaching a higher strategic value or placing a higher economic value on the asset so that the subsidy will be reduced, all of that tension is gone. When dealing with this type of gap funding or PPP model, complexity and uncertainty make it extremely difficult.