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Fletcher Construction Queries Public-private Partnership Value

Fuseworks Media
Fuseworks Media

Wellington, Nov 26 NZPA - Fletcher Construction is challenging the value of public-private partnerships (PPPs), saying many projects are too small to make the method work and questioning the costs involved.

Under the new National-led Government the issue took on added importance, as National's policy is to make greater use of PPPs for the development and management of infrastructure assets.

In a submission on the $1.7 billion Waterview roading, Fletcher said this country was too small to make the formula work other than in a handful of projects, The New Zealand Herald reported.

Sometimes benefits of transferring the risk of PPP projects to the private sector were illusory, it said, citing the British government's bailout of Metronet, the private operator of the London Underground.

The builder also cited major "upfront paperwork and contractual costs" on PPPs, saying the time and cost involved in this phase was significant and tended to counter any savings in the design and delivery phase.

It said few firms in New Zealand were large enough to bid on PPPs because the cost of bidding was significantly higher than on other forms of contract.

Fletcher acknowledged that its experience in the area of PPPs was in Australia, and the market had not really developed in New Zealand.

Mark Binns, chief executive of the infrastructure division of Fletcher Building, of which Fletcher Construction is a business unit, suggested that if the transfer of risk to the private sector was not complete, the true benefits of PPPs came down to an analysis of the funding costs.

There was a strong argument that the Government would be better off just raising debt, potentially through infrastructure bonds, to do the project using other traditional methods of contracting, he said.

NZPA WGT mjd nb

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