The European Court of Auditors (ECA) says EU public private partnerships (PPPs) used to fund infrastructure developments suffer from widespread shortcomings and limited benefits, after an audit of European-wide projects, including in Ireland, identified €1.5bn (£1.1bn) of inefficient and ineffective spending
In addition, the ECA’s report says value for money and transparency were widely undermined in particular by unclear policy and strategy, inadequate analysis, off-balance-sheet recording of PPPs and unbalanced risk-sharing arrangements.
Between 2000 and 2014, the EU provided €5.6bn for 84 PPPs, with a total project cost of €29.2bn. The auditors assessed 12 EU co-financed PPPs in France, Greece, Ireland and Spain in the areas of road transport and information and communication technology (ICT), with a total cost of €9.6bn and an EU contribution of €2.2bn.
Overall, they found that PPPs allowed public authorities to procure large-scale infrastructure through a single procedure, but these increased the risk of insufficient competition and therefore put the contracting authorities in a weaker negotiating position. Moreover, the majority of PPPs audited were subject to considerable inefficiencies during their construction, with seven of the nine completed projects – corresponding to €7.8bn – project cost incurring delays of up to 52 months and major cost increases.
Oskar Herics, the ECA member responsible for the report, said: ‘Almost €1.5bn extra in public funds was needed to complete the five motorways audited in Greece and Spain. Some 30 % of this (€422m) was provided by the EU. This was spent ineffectively in terms of achieving the potential economic benefits.’
In Greece (by far the largest recipient of EU contributions, with €3.3bn or 59 % of the total), the cost per kilometre of the three motorways examined rose sharply by up to 69 %, while the scale of these projects was considerably reduced by as much as 55%.
The ECA says the main reasons for this ineffective spending were that financial gaps caused by the renegotiation of PPP contracts had to be covered, projects were poorly prepared by public partners and, most crucially, contracts with private concessionaires were signed before relevant issues had been solved.
Report by Pat Sweet
