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Private Finance Initiative

Volume 454: debated on Tuesday 5 December 2006

To ask the Secretary of State for Foreign and Commonwealth Affairs what the total capital value is of each private finance initiative scheme overseen by her Department which has reached financial close; over what period repayments will take place; and what the total cost of repayment will be. (103519)

The Foreign and Commonwealth Office (FCO) has two major private finance initiative (PFI) contracts:

A contract with Global Crossing for the provision of a world-wide telecommunications network for a term of 10 years from 10 May 2000, which is treated as an operating lease; and

a contract with Arteos for the building, operation and maintenance of our embassy in Berlin, the value of which has been capitalised in our balance sheet. The contract, which runs for 30 years from 1998 until 2028, was originally capitalised in the financial year 2002-03 at a value of £33.41 million, with a balance of lifetime cost of £78.91 million.

Information relating to PFI contracts may be found in Note 26 to the FCO Resource Accounts 2005-06 (HC 1495), and in corresponding notes to previous years’ resource accounts, copies of which are available in the Library of the House. The lifetime cost figure is the sum of the projected unitary charge payments due over the lifetime of the project. These are not simply repayments of the capital spend on the projects, but include allowances for inflation and service provision. The amount to be paid is also conditional on the performance of the private sector contractor.