OK – enough of all this excitement

If there’s a new year’s resolution to be made for 2026, it has to be that we’re going to kill off the sexy fringe and bring infrastructure back to where it belongs – boring and humdrum, delivered by the right sort of people.

Look around the world at all the infra and energy assets getting into trouble, and the only conclusions to draw are… vanilla is the flavour to choose when it comes to publicly procured infra/energy and “bad actors” need to be left in the wings.

We’ve all watched in horror as governments lose sight of infrastructure objectives and their responsibility to tax payers, while smart money abuses the system for personal gain.

Bad actors have been at play for a long time and we’re reaping the consequences with the likes of Thames Water which – according to our latest story from earlier this week – is “taking longer than expected” to agree a deal for new equity and debt injections in its bid to avoid special administration.

Talking to folk around the market this week, it’s hard to identify exactly when the “bad actors” first got their knees under the table, but they’ve been there a lot longer than most would like to admit… and they sit on both sides of that table.

For the private side, some point as far back as 2006 with the sale of the Secondary Market Infrastructure Fund (SMIF) to Land Securities Trillium, but everyone at the time merely doffed their caps, saluted a fantastic exit with “well played”.

Others point to the M6 toll road as the perfect example of financial engineering setting the scene for a car crash of impressive magnitude. One banking chum points out “the M6 had a bonkers step-up swap structure which, in 2006, the rating agency claimed reduced refinancing risk”.

And yes, all 3 of these examples are in the UK. Why? Because the UK has first mover disadvantage, but there are similar situations evolving in other markets.

And that’s what gives cause for concern.

New year message

So, here we sit – staring at our screens – and you’ve gotta wonder about how we got into so many messes.

Where did it all go so horribly wrong? How can such important societal functions as energy, infrastructure, transport and digital end up being the plaything for financial carpetbaggers?

It all started with – as one infra mate puts it – “governments moving away from the core principles of allocation of risk to those who are best placed to manage them, and turning this into an off-balance sheet play”.

But it’s not just central government, sometimes the real enemy to private sector involvement in infrastructure comes at the grassroots and these bad actors (as one puts it) are “looking to f**k projects over in order to achieve cost savings”.

But then, those who sit on the other side of the table have proven themselves more than equal in their performances as bad actors as “the equity side make out like bandits, leaving others to clean up the mess”.

Time to ring the changes

From the public side, it feels like a modern-day Thirty Years’ War of attrition waged against the private finance and operation of nationally important infrastructure.

And the finger of blame tends to be pointed at the private sector. Earlier today there was a BBC news story lambasting the former private operator of a handed-back PFI school where the kiddies were freezing to death. Funnily enough, that story’s been taken down… likely because the fault lies with the public side!

But the private sector is far from innocent and a “rethink on the model” is required for publicly procured infrastructure.

According to one source, we need to “take it back to basics with proper guardrails and sensible expectations as well as a rethink on how to ensure that liquidity is there through sensible approaches under Basel etc”.

The lender adds: “We need governments to be brave and come back to properly thought-out PPP pipelines across energy, infra, transport and digital, properly assigning and valuing risk so that everyone gets a fair deal rather than demonising the private side – but also having proper guardrails to avoid bad actors from taking out all the value from infra without investing.”

There need to be fewer players “looking for a quick buck or a management fee”, favouring proper investors – debt and equity – “looking for stable, risk appropriate returns”.

The source concludes: “And that also means governments firing whichever a***hole it is in the Basel committee who clearly hates project finance so banks are incentivised to invest again.”