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Atkins warns that profit clampdown could make PPPs unviable


GOVERNMENT DEMANDS for a bigger share of profits on privately financed infrastructure deals are undermining their viability, a senior consultant warned last week.

WS Atkins Investments managing director David Clements warned that, under the demands made by the public spending watchdog the National Audit Office (NAO), private investors might withdraw from projects because potential losses could outstrip expected profits.

'The public sector is trying to drive the upside out of public private partnership (PPP) contracts, ' said Clements.

He told the ICE's 'National Investment - the opportunities and risks' conference that the government had clamped down on profits from PPP contracts under pressure from .

The NAO's report on refinancing the privately financed Fazakerley prison criticised the Prison Service for failing to negotiate a bigger share of the increased profits resulting from refinancing the project.

WS Atkins has already invested in several PPP projects and is a member of Metronet, which is preferred bidder for two of the three London Underground PPP contracts.

Clements also voiced concern over government interference in major privately financed in frastructure projects, following transport secretary Stephen Byers' decision to put Railtrack into administration in October.

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