PF Archive

France's PPP bonanza pushed into 2011, but renewables even further

17 12 2010

 France was never meant to grow into a PPP powerhouse. During the middle of the last decade, while other jurisdictions tried to extract greater feats of complexity from the private sector, the French dailly obligation, which featured little per­for­mance risk, made for low-margin, straightforward business. Post-crunch, the broader European PPP market moved into sync with the French conception of risk transfer, just as the French state rolled out a guarantee product that surpass­ed most of the post-crunch palliatives for weak lender appetite. The full debt guarantee could only be used for designated major projects and was set to expire at the end of 2010. For all this support, big deals have still been a long time closing, and several have fallen by the wayside, most notably the Reunion Tram-Train, which was set to be the first deployment of the state guarantee. The French overseas department, located in the Indian Ocean, decided to drop the project in June, after deciding that despite the presence of substantial central government grant money, its limited contribution would be better spent on a road. The preferred bidder on the Eu1.6 billion ($2.1 billion) project, a consortium of AXA Private Equity, Bouygues, Bombardier, Colas and Veolia, had indicated that it might try and enforce a Eu200 million termination payment, but by June the CFO of Bouygues, Philippe Marien, was admit­ting that the project was dead. The incoming UMP government ran on a platform of opposing any tram-train project with a public contribution, and set itself...