Fluor sees finance gap in U.S. projects
NEW YORK (Reuters) - The flow of money once provided by public-private partnerships for large U.S. infrastructure projects has dried up, and the sector will likely require government money to fill the gap, a top executive at engineering and construction group Fluor Corp (FLR.N) said on Thursday.
Those partnerships, which link public money with investments from private companies to build new highways, bridges and other large projects, have fallen victim to the financial crisis that has prompted banks to sharply restrict their lending.
"The financing in particular for the PPPs and the private investment kind of dried up overnight," Stephen Dobbs, senior group president at Fluor's Industrial and Infrastructure group, told the Reuters Infrastructure Summit in New York.
Much of the federal government's stimulus money will go for "shovel-ready" projects, Dobbs said, which fall far below the $300 million threshold for projects that Fluor would consider.
Still, the company is likely to see opportunities from the nearly $800 billion stimulus spending package's provisions designed to help clean up nuclear facilities, he said.
Fluor, based in Irving, Texas, is currently working on transportation projects such as a high-speed rail line in the Netherlands, high-occupancy highway toll lanes on the Capital Beltway in Virginia and the World Trade Center Transportation Hub in New York City.
Dobbs said so far governments in Europe have proved more willing to step in to cover funding problems when private financial players were not willing lend money for projects.
"I think it's likely you are going to see that happen in the U.S. to get us through this period where there is not debt in the structure (of) the financings to make that work," he said.
The establishment of a national "infrastructure bank" would help get large projects off the ground, he said, and could also prevent those projects from getting bogged down in state and local demands for their own projects.
President Barack Obama has proposed establishing a $5 billion national infrastructure bank as part of his budget plan.
Dobbs said he also expected to see a shift to developing transportation alternatives beyond roads and highways.
"We will see more of an emphasis on mass transit and potentially high speed rail, not just conventional transit," he said.
Still, Fluor has twice had contracts to begin developing high speed rail in Florida revoked because of political problems, and seen similar problems in getting high-speed rail approved in Texas.
"Being an engineer, it's a frustration in terms of dealing with the politics. Areas like Texas and Florida are ideal for high-speed rail due to the topography," he said.
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