Tom Parlon (Laois-Offaly, Progressive Democrats)

Almost €500 million of private finance will be invested in the national roads programme on foot of the contracts awarded to date.

A number of projects signed in the environment sector range from the small to the very large and include a cross-section of public private partnership structures. The Fatima Mansions refurbishment project in Dublin which the private sector is to design, build and finance, is under way. Operational design, build and operate contracts include the Ringsend and Wexford waste-water treatment facilities. There have been two design, build, operate and finance projects to date in the education sector. These are the bundle of five schools in Ballincollig, Clones, Dunmanway, Shannon and Tubbercurry and the National Maritime College in Haulbowline, County Cork. Furthermore, the Department of Education and Science is in negotiations to reach financial and commercial closure on the Cork School of Music project.

The slow establishment of public private partnerships in some departmental areas is due to a number of factors including skills and capacity issues. Public private partnerships are acknowledged to be complex and can entail financial arrangements extending to up to 30 years. Partnerships may require the public sector to deliver a detailed initial output specification and consider the whole-life costs of a project including operation and maintenance. The process places new demands on the public and private sectors. More effort is required up front in scoping, procuring, and negotiating projects. It is important to ensure proper evaluations and scoping of public private partnership projects through proportionate processes.

Guidelines require that the National Development Finance Agency is consulted by State authorities at a very early stage of the procurement process in all public private partnership to ensure there is maximum opportunity to avail of its expertise. State authorities must refer all major or grouped projects involving more than €20 million to the National Development Finance Agency for advice. There is also a facility to refer projects of lesser value to the agency.

The agency has the function of advising on the optimal method of financing public investment projects to achieve value for money. In certain cases, the use of private finance may not be justified and the agency has the power to fund projects itself where this represents the optimal approach. Ultimately, whether or not to pursue an approach advised by the National Development Finance Agency is a decision for the relevant Department's Accounting Officer.

As is the case with all procurement processes, public private partnership projects can experience delays. This can be seen in the case of some projects envisaged for 2005 and announced in the Estimates for 2004. It is important to note that delays can arise from factors unrelated to the public private partnership process itself. Delays may result from the complexity of procurement and the process of identification of suitable projects which place skills and capacity demands on procuring authorities. The Department of Finance is aware of these issues and works in partnership with the relevant Departments, agencies and other stakeholders to minimise the degree to which they impact negatively on progress on public private partnership projects and the public private partnership process in general. While the time required to undertake up-front preparation can be onerous, the benefits are evident in the early delivery of services. The private partner must deliver to secure payment.

Public private partnerships have a continuing role to play in addressing our infrastructural needs. The public private partnership process can be employed where it offers potential for the timely delivery of a project on a value-for-money basis involving, inter alia, optimal risk transfer to the private sector over the lifetime of a project. The steps set out in the guidelines issued by the Department of Finance are designed to achieve this objective. The central public private partnership unit continues to identify ways to streamline processes as it develops the necessary guidance on procedures to be followed.

Public private partnerships must be considered within the overall context of public investment in infrastructure and public services. Partnerships represent a procurement tool to be used alongside traditional approaches and are certainly not intended to replace other more mainstream options entirely. In appropriate areas and given the appropriate level of skills, public private partnership is a real and viable option. We have learned from our experience to date and draw on it to drive the process in light of the demands public private partnership makes on the public and private sectors if it is to achieve its potential in the Irish context.

I thank the Cathaoirleach for providing me with this opportunity to speak to the House about public private partnership. I look forward to hearing the views of Members.