Scheme's preferred bidder successfully secures entire funding without recourse to PFI rescue fund
Funding for the £5bn M25 road-widening scheme has been secured without recourse to the government's new £2bn PFI rescue unit, and the deal will be signed within the next month.
The preferred bidder, Connect Plus, which has contracted Balfour Beatty and Skanska to carry out the £1.2bn road-widening works, has now told the government it has approval from lenders for more money than is required.
It had been thought that the Treasury's new PFI unit, which this month intervened with £120m of lending to enable the £3.8bn Manchester waste PFI scheme to go ahead, would be required to make the M25 mega-project stack up.
However, a spokeswoman for the Highways Agency said: “Connect Plus have told us they have now received confirmation from a number of banks who have received credit approval to provide funds for the project. The total approval now exceeds the amount required by the project.”
A source close to the project said: “We thought there was going to be a funding gap but there isn't now - we're confident it's all lined up.
“It seems the banking sector are sorting themselves out and are coming back in to the market as they're realising they still have to do business.”
The Highways Agency said it was still keeping the option open of getting further Treasury funding, in case the funding situation changed again. However the Treasury confirmed it was not at present in discussions with the agency over the issue.
More than 20 banks are thought to be involved in funding the scheme, including the European Investment Bank, and high street banks including HSBC and Lloyds. There are also reported to be a number of Japanese banks involved.
The £5bn PFI programme includes £1.2bn for the initial widening works and further money to maintain the motorway over the following 30 years.
Earlier this month, Viridor and John Laing signed off funding for the £3.8bn Manchester waste PFI after a £120m bail out from the new Treasury fund.
The fund, officially called the Infrastructure Lending Unit, was set up to unblock £13bn of stalled PFI schemes by providing lending at commercial rates where banks where unwilling to fund schemes.