Cost to public purse of Derry school PPP/PFI contracts has risen to £185.2m

The total cost to the public purse of the St Mary’s and St Cecilia’s schools built under a private finance initiative (PFI) in the late 2000s has risen to £185.2m, a new audit office report has confirmed.

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Did you know with an ad-lite subscription to Derry Journal, you get 70% fewer ads while viewing the news that matters to you. St Cecilia's College and St. Mary's College were built under what is known as the Derry Diocese Public Private Partnership (PPP) contract which entered service on September 2, 2010.

Advertisement Advertisement The contract has a duration of 25 years and a scheduled end or 'hand-back' date of April 1, 2036. The total up-front capital investment to develop the new campuses under the terms of the PPP was £45m. However, the total value of unitary payments made up until 2023-24 stood at £86.



69m. Advertisement Advertisement Moreover, the outstanding projected value of unitary payments due to be made between now and the end of the contract is £98.51m.

Total unitary payments are thus projected to reach £185.2m over the life of the contract. The Derry Diocese PPP is one of nine PFI’s entered into by the Department of Education to deliver 20 schools across the North.

Advertisement Advertisement A new Northern Ireland Audit Office (NIAO) report on the management of the schools estate published this morning shows the nine PPP/PFI contracts will delivering around £375 million of private sector capital investment. However, the total cost of the contracts to the public purse has now risen to £1.54 billion.

"The Education Authority (EA) is the paying agent for the Department and the unitary charges are paid from the EA block grant. Since the first contract in September 2000, the EA has paid £751 million in unitary charges and expects to pay a further £789 million before the final contract is ended in 2039-40. Advertisement Advertisement "That puts the total cost of building, operating and maintaining the 20 school projects at £1.

54bn,” the report states. The audit office report points out that St. Mary’s and St.

Cecilia’s remain in private ownership until the Derry Diocese PPP contract ends, when their ongoing maintenance will become a direct public sector responsibility. It forecasts that when the contracts end – in 2036 for the two Derry schools but much earlier for some of the others – there will additional maintenance demands on departmental budgets, with maintenance unlikely to be available on the same basis as during the contract. Advertisement Advertisement "The report urges the Department to ensure that it has appropriate plans in place to manage this transition as assets not in an appropriate condition at handover risk putting additional pressures on the system,” said the Auditor General Dorinnia Carville.

Her report explains how ‘PPPs are collaborations between government entities and private sector companies to deliver public services or infrastructure projects’. Under a PFI ‘the private sector company typically finances, builds, operates, and maintains the project over a long-term contract, usually 20 to 30 years’, the report adds. Advertisement Advertisement "The government entity pays the private sector company over the contract period through regular payments, or unitary charges, for the use of the infrastructure.

PPP/PFI contracts tend to be used for large-scale developments such as transportation systems, hospitals, or schools,” it advises..