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The Chancellor of the Exchequer and Chief Secretary to the Treasury announced the UK Guarantees scheme on 18 July 2012. The scheme aims to kick start critical infrastructure projects that may have stalled because of adverse credit conditions.
Around £40 billion of projects could qualify for the provision of guarantees. These projects could come from a range of sectors including transport, utilities, energy and communications. Eligible projects will be subject to charges, due diligence and as a minimum must meet five key criteria:
The Government will consider the most effective form of guarantee on a case-by-case basis using a robust assessment and approvals process. The outline process for project sponsors to submit an application for an infrastructure guarantee is will involve three key stages:
The Government has wide discretion over how a guarantee is structured in terms of scale, timing, risk exposure and relationship, subject to the terms and dynamics of each individual project. The guarantees could cover key project risks such as construction, performance or revenue risk.
Commercial specialists will work closely with sponsor Departments, project teams (both public and private) and their commercial and financial advisers to understand key project risks, structure and undertake full due diligence.
Projects which are classified in the private sector and where the project sponsors wish to make an application should initially contact Infrastructure UK, which is the HM Treasury unit charged with providing a stronger focus on the UK’s long-term infrastructure priorities.
HM Treasury will not accept direct applications from third-party advisors, unless previously discussed and agreed with HM Treasury. Project sponsors of public sector projects should make a direct application to HM Treasury in conjunction with the sponsor Department or relevant procuring authority.