The private finance initiative (PFI) is a way of creating “public–private partnerships” (PPPs) by funding public infrastructure projects with private capital. Developed initially by the governments of Australia and the United Kingdom, and used extensively there and in Spain, PFI and its variants have now been adopted in many countries as part of the wider programme of privatisation and financialisation driven by an increased need for accountability and efficiency for public spending. PFI has also been used simply to place a great amount of debt ‘off-balance-sheet’.
PFI contracts are typically for 25–30 years (depending on the type of project); although contracts less than 20 years or more than 40 years exist, they are considerably less common. During the period of the contract the consortium will provide certain services, which were previously provided by the public sector. The consortium is paid for the work over the course of the contract on a “no service no fee” performance basis.