Scotland's private infra program suffers setback

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Scotland's private infra program suffers setback

The Scottish private infrastructure program has suffered a setback after coming into conflict with of EU borrowing rules.

The Scottish government's flagship program planned to provide billions of pounds to privately financed social and transport projects such as hospitals, schools, colleges and roads.

However the Office for National Statistics (ONS) has recently announced that the £1.45 billion (US$2.26 billion) Aberdeen bypass, currently under construction, had to be counted as a public asset, which has forced the Scottish government to review private financing strategy.

The ONS' decision limits the government's capacity to provide financing in the future and it has a direct impact on its accounts.

The ONS also raised problems by ruling that special purpose vehicle (SPV) firms set up by the Scottish Futures Trust (SFT), to run and control the projects, were not private. The ONS stated:

"Based on the Scottish government's influence over the collective corporate policy of the SPVs, including effective vetoes over key aspects and the accrual of surpluses to the Scottish government, it was judged that the AWPR SPVs are subject to public sector control. ONS also concluded that the unit does not have the features of a market producer."

There are approximately 24 main projects in the country that will be restructured and delayed as a result of the new tests imposed on privately financed projects by Eurostat, the statistical office of the European Union.

The rules also affect the UK government's plans to provide funds to privately financed infrastructure projects.

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