Magazine article Public Finance

Financial Crisis and Recession Will Hit PFI Schemes, Experts Warn

Magazine article Public Finance

Financial Crisis and Recession Will Hit PFI Schemes, Experts Warn

Article excerpt

The financial crisis will increase the cost of Private Finance Initiative projects, while the slowdown In the economy could cause further problems if contractor firms are hit, experts have warned.

The warning came as it emerged that Aberdeen Council's E12Om 3Rs school bulldlnq project with private consortium Nyop was underpinned by financing from disaster-struck lcelandk bank Landsbanki.

The council said it was confident the part-built schools would be completed, although no comment was available from Icelandic developer Nysir this week. Gordon Edwards, Aberdeen's corporate director for resources management, said: 'It was only very recently that Landsbanki was downgraded from the highest credit rating to a lower one - and that was months after the 3Rs project reached a financial close.'

Hike Hariow, a partner In KPMG's Infrastructure advisory business, said the state of the financial markets would slow down imminent PFI deals. …

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