Belgian government looks to private sector to finance renovation of public buildings

With budget constraints preventing rapid energy efficiency upgrades in public buildings, the Belgian government is turning to the private sector. It's seeking help from private companies to reduce the energy costs of 2,586 government buildings over the next fourteen years, De Standaard reported Monday.

Belgian government buildings need renovation. Many are outdated, poorly insulated and lack environmentally friendly energy applications. With federal budget constraints preventing substantial immediate investment in these structures, the government seeks to raise 3.2 billion euros from the private sector to renovate 2,586 government buildings and meet climate targets adequately.

This approach was proposed and developed in 2021 by Finance minister Vincent Van Peteghem (CD&V) and is currently under discussion within the government. It's unlikely that the approach will cause much debate, as all relevant ministers have been involved in the process.

Investment fund

De Standaard has seen the memo, which is going to the government. It says an investment fund will be set up to finance the renovations, and the Federal Participation and Investment Company (FPIM) will oversee the project. In addition to FPIM, institutional investors, mainly financial institutions, will pool the necessary funds.

These private investors expect a return on their investment. Government documents suggest an annual return of 5 per cent, although this figure has not yet been finalised.

Energy cost reduction

Once the government buildings are retrofitted, they are expected to emit 63 per cent less CO₂, resulting in a 64 per cent reduction in energy costs. These savings won't go to the government but will help pay for the retrofits. But they may not be enough to pay back the investors. That's why the government estimates it will have to supplement the budget by about 35 million euros a year for 43 years.

Due to the long duration of the project, the annual impact on the budget is relatively small. According to the Van Peteghem document, this approach will complete the 3.2 billion euro renovation program by 2037. After that, the contractor will be responsible for maintenance and energy efficiency for another thirty years. Under normal circumstances, the renovation program would not be completed until 2076.






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