Qatar could in­vest £10b in UK projects

The Pak Banker - - 6BUSINESS -

Qatar has be­gun talks with the UK government to in­vest up to £10 bil­lion from the gas-rich Mid­dle East­ern state into key in­fra­struc­ture projects in Bri­tain. Of­fi­cials and min­is­ters from both coun­tries have held dis­cus­sions over what schemes the Qataris could in­vest in and whether a spe­cific fund could be set up. The po­ten­tial projects in­clude en­ergy plants, road and rail projects and even the Thames "su­per­sewer" un­der Lon­don.

Qatar has be­come a prolific in­vestor in Bri­tish as­sets in re­cent years with a port­fo­lio of as­sets held via sev­eral funds en­com­pass­ing as­sets from Har­rods and the Shard sky­scraper to Heathrow air­port. But set­ting up a ded­i­cated fund to fi­nance government-backed schemes would take Qatar's in­vest­ment in the UK to an­other level.

Among the spe­cific schemes dis­cussed is the new £14 bil­lion nu­clear re­ac­tor at Hink­ley Point in Som­er­set planned by EDF, the French en­ergy gi­ant. EDF has been seek­ing new in­vestors in its new-build nu­clear pro­gramme since Cen­trica quit its joint ven­ture last month. The government is also keen to shoe­horn overseas in­vest­ment into new gas plants and wind farms as it closes down a swath of coal-fired power sta­tions.

David Cameron hosted a del­e­ga­tion at Down­ing Street in Jan­uary with both the Emir of Qatar and the Qatari prime min­is­ter as guests of hon­our. There, the UK's prime min­is­ter made clear he would wel­come a ma­jor in­jec­tion of Qatari in­vest­ment in the Bri­tish econ­omy. But dis­cus­sions are still pro­ceed­ing over how any fund would be struc­tured and what re­turn the Mid­dle East­ern in­vestors would re­ceive.

Some in­volved in the ne­go­ti­a­tions say the Qataris have asked for an ef­fec­tive "first re­fusal" over some of Bri­tain's big­gest in­fra­struc­ture projects when they are on the draw­ing board. But oth­ers point out that hav­ing a "first call" over a government project would be il­le­gal un­der Euro­pean Union law, ac­cord­ing to one White­hall source.

The fig­ure of £10 bil­lion has been cited although the timescale for this ex­pen­di­ture has not been agreed. Fins­bury, which pro­vides pub­lic re­la­tions to Qatar, re­fused to com­ment.

The talks have taken place as the government seeks to push through more ma­jor en­ergy and trans­port schemes with­out an enor­mous out­lay of tax­pay­ers' funds.

In­fra­struc­ture UK, a wing of the Trea­sury, has been work­ing closely with UK Trade & In­vest­ment to court overseas in­sti­tu­tional in­vestors.

Qatar has made a string of high­pro­file ac­qui­si­tions in re­cent years in­clud­ing stakes in VW-Porsche, LVMH, Credit Suisse, J Sains­bury and Bar­clays. The state demon­strated its in­ter­est in in­fra­struc­ture last year when one of its funds, Qatar Hold­ing, bought 20 per cent of BAA, the owner of Heathrow air­port. Ge­orge Os­borne, the chan­cel­lor, has sig­nalled that Bri­tain is open to overseas in­vest­ment in strate­gic in­dus­tries, even en­dors­ing the po­ten­tial in­vest­ment of Chi­nese sta­te­owned com­pa­nies in the new nu­clear in­dus­try.

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