Limitations of PFI
1. Lack of Transparency: In the traditional method of finances there is transparency in the public sector. But with PFI, there is the involvement of the private sector in various projects which results in a lack of transparency. It may ultimately raise public concerns about accountability and monitoring.
2. Dependency on the Private Sector: The funding, construction, and operation of PFI projects are mostly dependent on the private sector. In case the private partner runs into financial difficulties or fails to execute as planned, then it will ultimately interrupt essential public services.
3. Problems in Revision: When a PFI contract is established, it is difficult to change its conditions. But in this dynamic environment, it is necessary to make changes. Thus contract flexibility is limited.
4. Focus on Cost Reduction: Private partners may take shortcuts or reduce service quality to save costs, which can compromise the quality of public services.
5. Transferring of Burden to Taxpayers: In PFI at the time of repayments, interest must be paid along with it; ultimately transferring the burden to the taxpayers.