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Home >  About us >  Access to information and publications  >  Disclosures under the Freedom of Information Act 2000  >  2005 Freedom of Information requests  > PFI - rates of return

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PFI - rates of return

01 February 2005

Request:

Could you please provide me with the information the Treasury holds on the rate of return made by the private sector on PFI contracts?

Disclosure:

HM Treasury does not ask for  data on actual PFI project rates of return and therefore does not have this data. HMT seeks to establish policies to ensure that PFI is only used when a Value for Money case is proven.  The rates of return forecast at financial close to be made on PFI contracts will be within the business case model for individual projects.  Investors’ rates of return affect the unitary charge tendered by bidders but are not analysed separately by HMT. 

PricewaterhouseCoopers (PWC) were commissioned by the Office of Government Commerce (OGC) in July 2001 to assess rates of return bid by private sector participants in the PFI market and compare to expected returns against appropriate industry benchmarks. A summary of this report was published in Annex C of Meeting the Investment Challenge, published by HM Treasury in July 2003, found on HM Treasury website (Enterprise and Productivity). The full study is available on the PWC website. HMT does not have the supporting information for this report.

Expected rates of return will be found in business case models throughout the procurement process. The Stage 1 and Stage 2 Value for Money quantitative assessments allow for the procuring authorities to input the expected rate of return as part of the value for money calculation. This is at an early stage of procurement, and may not reflect the expected rate of return in later business cases. More detail on the inputs into the quantitative model is found on the HM Treasury website (Quantitative Assessment User Guide ). Final business cases for individual PFI projects will also have an expected rate of return for the private sector contractor. We are not aware of any department which holds central data from the individual business cases on the expected project equity rates of return for the private sector.

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