All, or nearly all, construction risk and all operating risk must be borne by the private sector and 3. Pat - PFI has introduced a new set of assessment criteria for projects like NET, based on the 'bankability' of the project and the way commercial and technical risks are shared and managed. However, the economic 'value for money' assessments, which were required under the Section 56 regime are still fully tested by DETR and Treasury and have to be met. Pat - Our experience is that the banks are very risk averse, but the return on long term debt is not high. Banks expect to get their money back under all circumstances and will 'step in' to take over the obligations of the concession operator should things go wrong.
Equity is subject to greater risk and therefore the return sought is higher.
In the absence of a clear and long term national policy on transport, investment in transport systems must remain a high risk enterprise. By the time this interview is published hopefully the white paper will have indicated a better prospect. Pat - It is eight years since I was asked to lead the officer team developing LRT in Nottingham. I hope soon to see this work come to fruition with Government approval for funding Line 1 and the start of construction next year. Pat - If Government gives the go ahead this summer, I am confident NET Line 1 will be operating before the summer of 2002.