State loses millions due to cancelled projects

The State has had to write off losses worth tens of million of euro as a result of the collapse or postponement of a number of public-private partnerships (PPP).

The report outlines how when three planned bundles of third-level education PPP projects were cancelled last November, €10.1m had already been spent by the National Development Finance Agency (NDFA) on enabling works and consultation fees.

Among the locations affected by the decision were Cork Institute of Technology, Limerick IT and IT Tallaght, while €2.9m had already been spent on enabling costs at Waterford IT alone.

At the same time the Dublin Institute of Technology’s proposed Grangegorman campus development was postponed.

In the transport sector, the shelving of the Metro North, Metro West and Dart Underground schemes means the state is not benefiting from money already spent. Some €154m has been spent already on Metro North, including almost €26m on the purchase of 13 properties by the Railway Procurement Agency.

In addition, as part of the PPP tender competition for the project, it was agreed to compensate the underbidders for their tendering costs in the event that the procurement process was deferred. When it was, it meant the RPA had to pay one of the bidders €1m and may also have to pay another bidder the same amount.

Money already spent on the Dart underground totalled €43m by the end of last year, including almost €20m on design and PPP procurement, while €18.5m was spent on Metro West.

Elsewhere, a dispute between the NRA and a PPP company about the completion of works on the N6 Galway to Ballinasloe PPP scheme last year resulted in a settlement under which the NRA paid the firm an additional €16m, most of which was paid last year. The report also outlines the extent to which the state is locked into long-term contracts which will result in payments being made for decades. For example, on the PPP project for the Limerick Tunnel, projected traffic levels using the facility will not reach the guaranteed levels outlined at the start of the project — meaning the state will be making additional payments to the PPP company for the term of the contract, until 2041. The contract for the Clonee-Kells road runs until 2052, meaning it is one of the PPP projects with the highest projected total expenditure at €714m.

Overall, the report finds that the aggregate exchequer expenditure on currently contracted PPP projects is projected at €6.4bn, with some assets secured for projects and money spent that “has delivered no effective benefit”.

The report also stressed that “few value-for-money reviews of PPP projects have been published”, but the Department of Public Expenditure said there were concerns over the publication of information that may be commercially sensitive.