Private Finance Initiative (Pfi)

The Private Finance Initiative (PFI) is a UK government procurement policy which aims to transfer the delivery and funding of public infrastructure projects to the private sector.

Under PFI, a private sector consortium designs, builds, finances and operates a facility on behalf of the public sector authority for an agreed period of time. The consortium is typically composed of a construction firm, an operator and one or more financial institutions.

During the operating period, the consortium charges the public sector authority for the use of the facility. These payments are made over the life of the contract and are used to repay the construction costs, as well as provide a return on investment for the private sector partners.

At the end of the contract period, ownership of the facility is transferred back to the public sector authority.