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U.K. Earmarks 33 Billion Pounds for Infrastructure Guarantees

Oct. 22 (Bloomberg) -- The British government may guarantee 33 billion pounds ($53 billion) of infrastructure projects, over half of them in the energy industry.

The 40 road, rail and energy projects have been selected as eligible for the government to act as guarantor, the Treasury in London said in an e-mailed statement today. Further discussions, assessment and due diligence will now be carried out.

Prime Minister David Cameron is seeking to boost investment in Britain’s aging infrastructure amid projection that the U.K. is set to overtake Germany as the European Union’s most populous country by 2045. Today’s announcement comes a day after Electricite de France SA said it will build the U.K.’s first nuclear reactors since 1995.

“Getting our infrastructure right means we can be globally competitive, boost growth and create jobs across the U.K,” Chief Secretary to the Treasury Danny Alexander said in the statement. “I hope today’s announcement will encourage even more businesses to consider how they can take advantage of a guarantee.”

The government guarantees would cover a proportion of the capital value of the project should companies fail to obtain private funding. As much as 40 billion pounds of guarantees can be issued under the program, the Treasury said.

The government already awarded a 75 million-pound guarantee to Drax Group Plc in April for its 700 million-pound plan to partially convert the U.K.’s biggest coal power station, in North Yorkshire, to biomass, with the intention of producing 7 percent of the country’s electricity.

Helius Energy Plc’s Avonmouth biomass energy-generation project in southwest England; the Islandmagee gas storage project in Northern Ireland; two Intergen NV gas-fired power generation projects in Lincolnshire in eastern England and at the Gateway Energy Centre in Essex, near London; and the Neart Na Gaoithe wind farm in Scotland are among the projects that prequalified for a guarantee.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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