Project finance: Bringing more private delivery and/or investment into the rail industry

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21st March 2017
The Rail Delivery Group (RDG) has published CEPA's report "Project finance: Bringing more private delivery and/or investment into the rail industry"

Rail London
Following delivery of Phase 1 in 2016, the 2nd phase of this project was to develop thinking on how the approach to third party investment in the rail sector might be improved. To achieve this, CEPA engaged with investors and lenders to understand in more detail finance providers' and sponsors’ appetite for opportunities in infrastructure investment generally (including risk and return profiles) as well as the relative attractiveness of opportunities in the rail sector specifically. Examples of good practice in other sectors and countries were also taken into consideration.


The key recommendations made in the report are:
 
  • Government and industry need to demonstrate a strong commitment to alternative approaches and a pipeline of projects.
  • There should be a clear and transparent process for seeking private involvement.
  • An appropriate, detailed and independent approach to VfM analysis is required.
  • Costs to investors should be minimised, timescales to be as short as practicable.
  • A sustainable pipeline of PPP projects should be developed and published.
  • The aim should be a pilot programme of 5-6 projects.
  • ORR should review its accessibility to investors and ensure that regulation facilitates alternative approaches.
  • Projects should be structured appropriately and standardised where possible.
  • Industry should build institutional capacity and build relationships with the private sector.

The full report is available to download from the RDG website.

To find out more about CEPA's transport economics and policy team, please visit: http://www.cepa.co.uk/sector-transport, telephone: +44(0)20 7269 0210 or email: info@cepa.co.uk