Centrus welcomes the Irish government’s new infrastructure investment plan
In the last week the Irish government launched its Capital Investment Programme 2016 – 2021, which is welcomed by Centrus along with others in the infrastructure sector. The plan envisages that €27bn will be direct state investment, €500mn will leverage private investment in the new PPP programme – focused on the justice, education and health sectors – and a further €14.5bn will be invested by state owned companies including ESB, Eirgrid and Ervia.
While many of the PPPs detailed in the plan e.g. 3 roads projects, the Courts bundle, Grangegorman DIT are already in progress, new PPP projects highlighted within the programme include the following:
- A new Family Law and Children’s Courts complex,
- A sizable new PPP will be used to deliver new garda stations,
- €200mn for Institutes of Technology,
- A new National Forensic Mental Health Services facility in Portrane,
- Primary care health services, similar to the Prime Healthcare bundle.
The €300mn allocated for social housing PPPs to deliver 1,500 units as part of an overall €3bn budget for the housing sector, announced in the Social Housing Strategy 2020 last year, was confirmed and another €400mn announced for spending on social/affordable housing in 2021. Furthermore, the plan noted that the first bundle of 500 units (estimated capital value of c.€100mn) can be expected to come to market shortly.
The largest sector to benefit under the capital programme will be the transport sector with a €9.6bn budget and the largest project is the proposed Metro North project – estimated to cost €2.4bn and expected to begin in 2021. This is a scaled down version of the previous Metro project which will service Dublin airport along a route from the city centre to Swords and the government have not ruled out using PPP to procure the project.
The other key area of capital spending, €12bn in core national infrastructure by state owned companies, includes €5.75mn in energy, networks, renewable and conventional power generation by the ESB, Ervia, Bord na Mona and Eirgrid. Large scale projects already in the pipeline include the North-South Transmission Line (in planning), smart metering, Grid Link and Grid West (electricity grid buildout to the south, east and west of Ireland). Irish Water is projected to spend a further €4bn over the life of the plan and another €2bn will be invested in airports, ports, public transport, forestry and biomass. As this will be on balance sheet spending in many cases, we anticipate a steady stream of debt issuance from the semi-state sector to build out this pipeline over the life of the programme.
Centrus welcomes the increase in investment by the government in future infrastructure outlined in the Capital Investment Programme and anticipates our clients, ranging from equity and debt providers in the private sector to public sector/semi-state corporates, will find ample opportunity to participate in the Irish market as the plan is rolled out. We anticipate PPPs for social housing, the health facility in Portrane and the new family law and children’s courts complex will be amongst the earlier opportunities and we look forward to discussing these and other projects with market participants as further details emerge.
The government statement announcing the programme along with a link to the plan can be found at the following address: http://www.per.gov.ie/en/building-on-recovery-infrastructure-and-capital-investment-2016-2021-statement-of-the-minister-for-public-expenditure-and-reform-mr-brendan-howlin-t-d-on-29-september-2015/