Department of Transport

Transport leads the way in private finance projects - Watts

date 15 May 1996   source Department of Transport   type Press release

Three more DBFO road contracts to go ahead

John Watts, Minister for Railways and Roads announced that
expressions of interest in three more Design Build Finance and
Operate (DBFO) road projects had been invited today.

The three new projects announced are the 66 mile of trunk road
network between Cumbria and Bradford, 157 miles of the network in the
South Midlands and 73 miles of the Weald and Downland Network in Kent
and Sussex.

Speaking about the Private Finance Initiative at a London
conference on Transport Infrastructure, Mr Watts said:

" The Department of Transport .. has been at the forefront of
the Private Finance Initiative since its inception in 1992, and
remains at the heart of the initiative. Of the #4.8 billion of deals
agreed across Government in the financial year 1995/96, the
Department of Transport contributed #3.8 billion.

"These new DBFO projects extend the concept by including new
features. First, we shall be exploring with the private sector the
possibility of including contingent new construction schemes in the
projects because they will not have completed their statutory
approval process before the award contract.

"Secondly we shall be looking at possibilities for refining the
"shadow toll" payment to give the private sector further incentives
to make safety improvements to a route and to work with the Highways
Agency in making better use of the trunk road network."

Mr Watts referred to the good value for money provided by
construction led consortia on previous DBFO projects and said he was
also keen to see new types of bidder coming forward for the new
round of projects - for instance companies with operational
experience in the service sector.

Mr Watts said that the Highways Agency were looking wider than DBFOs
and considering other areas for potential PFI opportunities. For
example: Regional Control Centres to help manage traffic across the
network to improve the reliability of traffic flows and the
operational efficiency of the network through the collection,
processing and dissemination of real time traffic data;

Smaller scale road improvements and the installation and operation of
other equipment.

"Individually such projects are not headline news in the same
way as the projects for major improvement and subsequent operation
being delivered through DBFO contracts. Nevertheless they
demonstrate the commitment of the Department of Transport and the
Highways Agency to pursuing every possible PFI opportunity where this
might deliver improved services to road users and those affected by
the motorway and trunk road network."

He indicated that further opportunities for private finance could
arise if motorway tolling were to be implemented.

"My Department recently signed agreements with two consortia -
Bosch Telecom and GEC Marconi - who will participate in trials of
their equipment later this year at the Transport Research Laboratory.
We are in discussion with other consortia and will decide on the way
forward when the results are available."


In conclusion, Mr Watts said:

" By the end of this financial year, transport deals with a
total value of #6.5 billion will have been supported by the private
sector. This includes private sector contributions to the Queen
Elizabeth II Bridge at Dartford, the Second Severn Crossing, the
Jubilee Line Extension and the Heathrow Express.

"The Department of Transport is successfully harnessing private
sector funding and expertise to ensure best value for money for the
taxpayer. The Department's aim is to consider the potential for PFI
as a normal part of the procurement process. The continuing
partnership between the private and public sector means that together
we can maintain the necessary momentum to provide an efficient
transport network to serve the country's needs."

NOTES TO EDITORS

1. The Departments intention to pursue DBFO contracts was signalled
in the Chancellor's Autumn Statement (November 1993) followed by an
announcement by the then Secretary of State John MacGregor in
December 1993 (PN489/93). The latest projects to be taken forward
were first announced in the Budget Speech of November 1995.

2. The three further DBFO projects for which the private sector has
been asked to submit pre qualification submissions are:

A65/A629/A650/A590 (Cumbria to Bradford) - 66 miles of road to
include 6 major improvement schemes with an estimated construction
cost of about #100 million and other minor improvements.

A21/A26/A27/A259 (Weald and Downland) - 73 miles of road to include
6 major improvement schemes with an estimated construction cost of
about #140 million and other minor improvements.

A6/A43/A421/A428 (South Midlands Network) - 157 miles of road to
include 8 major improvement schemes with an estimated construction
cost of about #115 million and other minor improvements.

3. The Government's intention to introduce electronic tolling on the
motorway network was announced by the Chancellor of the Exchequer in
his Budget on 30 November 1993, followed by a more detailed statement
by the then Secretary of State for Transport, John MacGregor, on 2
December 1993.

4. The members of the two consortia who have signed to begin
testing motorway tolling equipment are:

- ANT BOSCH: ANT BOSCH (GER), Robert Bosch Ltd (GER/UK), Brown
and Root Civil (UK), Centre File (UK), EDS, (US/UK), Post Office
(UK), Mondex (UK),Syntegra (UK).

- GEC-Marconi: GEC-Marconi (UK), Lockheed IMS (US/UK), Syntegra
(UK).



# = pounds sterling

Railnews Archive ::: 1996-05-15 DoT-001

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