What is the Private Finance Initiative (PFI)?

The Private Finance Initiative (PFI) is a way of funding public projects with a private financer on board. It is a form of Public-Private Partnership (PPP). In a PFI built asset, the public does not own the asset straight after completion.  The financer maintains ownership of the building for the number of years agreed in the contract, during which period the Local Planning Authority makes an annual payment to the private company who provides the building and associated services, rather like a mortgage.

A typical PFI project will be owned by a company set up specially to run the scheme. These companies are usually a Consortium including a building firm, a bank and a facilities management company. Whilst PFI projects can be structured in different ways, there are usually four key elements: Design, Finance, Build and Operate.

Examples of projects funded and built using this model include schools and hospitals. PFIs are not very popular anymore.

Related Posts