Brian O'Shea (Waterford, Labour)
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Question 91: To ask the Minister for Education and Science the number, type and location of each project in respect of public private partnership costs provided for in his revised Estimates at the sum of €31,868,000 for 2008; the duration of each financial contract; the growth and net interest rate being charged; the name of the financial institution providing the funding and additional management charges, excluding construction and related maintenance costs; and if he will make a statement on the matter. [19725/08]

Batt O'Keeffe (Cork North West, Fianna Fail)
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My Department has to date entered into three separate contracts to design, build, finance, maintain and operate educational accommodation under the Public Private Partnership (PPP) model. There are two third level projects, the National Maritime College, Cork and the Cork School of Music as well as the Pilot PPP Schools which are located in Tubbercurry, Shannon, Ballincollig, Dunmanway and Clones. All three contracts are for 25 years. The buildings will remain in State ownership for the duration of the contract with the PPP Company being granted a licence to build the facilities and maintain and operate them for a period of 25 years.

Provision has been made in the 2008 estimates for expenditure of €32.4m on PPP projects with €28.4m of current funding being provided to cover the on-going payments in respect of all three projects and the balance of €4m (capital) provided to advance further PPP projects. The €28.4 m is divided further into a Second Level estimate of €10.8 million and a Third Level estimate of €17.6m. The interest rate for each project is fixed when the contract is concluded. During the bidding process, the risk of interest rate movement is retained by the public sector and is transferred to the private sector after the contract has been agreed. The rate is fixed by reference to the prevailing European Central Bank rate at the time the contract is concluded.

The interest rate on the debt for the three projects were set as follows. For the Pilot Schools, the contract provides that the interest rate increases by 0.15% over the 25 years giving an average fixed interest rate of 6.196%. For the National Maritime College, the interest rate deceases by 0.59% over the 25 years giving an average fixed interest rate of 5.563%. For the Cork School of Music, the interest rate increases by 0.1% over the 25 years giving an average fixed interest rate of 4.552%.

For a PPP tender to demonstrate better value for money, the additional cost of private finance must either be justified by risks transferred to the private sector or offset in some other way by innovative proposals to address the Department's requirements. The faster delivery of the building could also be taken into account in this respect. The Public Sector Benchmark provides a key measure for the Department to test the extent to which the bids are good value for the State. The principal funding for each of these projects has been provided by Barclays Bank in the case of the Pilot Schools and the Cork School of Music and by the Bank of Scotland and the European Investment Bank in the case of the National Maritime College. The annual facilities management charges for 2008, excluding construction and maintenance, in respect of each of the current projects are:

Pilot Schools €94,925

National Maritime College €102,293

Cork School of Music €124,775

The above charges are exclusive of VAT @ 21% and are index linked and reviewed with reference to the Consumer Price Index in the third quarter of each year. The €4 million capital provided in the estimates for 2008 will be used to progress the current Second and third Level Programme which consists of 27 schools and 9 Third Level Institutions.