Qatar cash sought by Alex Salamond

In an effort to attract cash for public-sector projects in Scotland, Alex Salmond is to visit Qatar next year.

The visit to will be used as an attempt by the Scottish First Minister to persuade the rulers of one of the richest countries in the world to loan the Scottish government funds for multi-billion-pound projects such as the new Forth crossing and an undersea electricity cable in the North Sea that would allow the transmission of wind and wave power from the North of Scotland.

If a deal is reached, it would mean that Qatar, which is run by Sheikh Hamad bin Khalifa Al-Thani, would pay up front for such projects and then be repaid over a number of years.

The initiative comes as the government at Holyrood faces increasing scepticism over its plans to replace the controversial Private Finance Initiative (PFI) and Public Private Partnerships (PPP) with a Scottish Futures Trust (SFT). Unlike the first two, which have been used extensively in recent years throughout the UK, the SFT will see profits of private investors in public projects capped.

But this has raised fears that investment companies will not be attracted by SFT schemes. The Qatar visit also comes at a time when bank investment funds are drying up in the West because of the credit crunch and the Scottish government’s own budget has little surplus money in its coffers.

Governments across the world are looking towards the Middle East to secure long-term finance from the state-owned investment funds in countries such as Qatar, built up on the back of massive profits from oil. Qatar’s fund is already said to be worth $60 billion (£32.5 billion) and is expected to double over the next few years.

A source close to the First Minister confirmed the visit, but said that it would be wrong to think that any projects were already “signed, sealed and delivered”. He added: “In challenging economic circumstances, it is even more important that the Scottish government pursues every single business and investment opportunity to grow the Scottish economy.”

Labour claimed that the publicity over Mr Salmond’s trip was a clear indication that the SFT was “in absolute chaos”. Andy Kerr, the Labour finance spokesman, said: “In over a year since they came to power, SNP Ministers have failed to commission a single new school. Now we learn that Alex Salmond wants to borrow money from Qatar but his visit isn’t planned until next year.

“The people of Fife deserve straight answers now about how the new bridge will be funded. It appears that Alex Salmond wants to make everyone wait several months, until after he’s been on a jolly to Qatar.”

The cost of a new Forth bridge is estimated at present to be about £4 billion and a report earlier this year to SNP ministers called on them to pursue “more radical funding streams and innovative funding options”. The report was prepared by the Islamic Finance Council, a Scottish-based body that represents Islamic financial interests.

Author: Jo Amey