Treasury appoints private sector experts to head dedicated PF2 management unit

Bonsall will set up and head the new PF2 Equity Unit to manage the public sector's shareholdings in the new projects. She will be responsible to the chief executive of Treasury department Infrastructure UK (IUK). The Equity Unit's staff will be made up of commercial and finance specialists, many of whom will come from the private sector, the Treasury said.

PF2 will replace the Project Finance Initiative (PFI) as the Government's main funding mechanism for public infrastructure projects. Under PF2, the Government will take on the role of a shareholder holding a maximum stake of 49%. This will allow the public sector to recover a share of the profits made by projects in the same way as private sector investors.

Once PF2 is fully operational, the decision to invest public sector equity will be taken by an Investment Committee made up of senior Treasury officials and two independent members. This committee will examine bids to make sure that they meet government criteria, which will be published shortly. Public sector shareholdings will then be managed by the PF2 Equity Unit, which will also evaluate prospective investments and regularly review their performance.

Bonsall, a former partner with law firm Linklaters who has worked in project finance and PFI since 1989, will sit on the board of PF2 project companies under the terms of the new scheme.

Announced at the end of last year, PF2 is intended as a "faster, more transparent" approach to using private finance to fund public infrastructure. Under PF2, project authorities will have 18 months to appoint a preferred bidder from the date the project tender is issued. Other changes will see project operators required to publish profits and revenue in the form of an annual statement; while investors with "long-term investment horizons", including pension funds, will be encouraged to invest in projects at an earlier stage.

Although projects procured under PF2 will still be run by private companies, the public sector will have "additional flexibility" on service contracts while cleaning and catering will be excluded and will instead be procured separately through shorter-term contracts. PF2 commitments will still be excluded from the Government balance sheet, however a "control total" for all outstanding commitments will be included as part of the Whole of Government Accounts.

The Government plans to consult on its PF2 shareholder documents "shortly", it said. These documents will set out further detail on the public sector's participation in the equity portion of PF2 projects.