PFI is mysterious acronym

In many countries PFI (meaning Private Finance Initiative) acronym is used as synonymous for PPP (Public Private Partnership). While it originated in UK, it is not a synonymous expression in UK with PPP; PFI being more specific relating to special government policy clearly defining what is and what is not PFI.

While Wikipedia defines PFI as a “method to provide financial support to PPPs”, which certainly is not correct, “as part of a wider program for privatization and deregulation” which is incorrect either, as PFI is a form of PPP and it is not mechanism for privatization or deregulation. Saying this, I have to add, that privatization or deregulation can be one of characteristics of a specific PFI project. Investopedia on the other hand defines PFI as a “method of providing funds for major capital investments, where private firms are contracted to complete and manage the project”, which is not complete definition but it is at least correct feature of PFI.

These were just two examples of PFI definition, and indeed when I look on the expression Private Finance Initiative I can assume that (a) this is initiated by private sector; and (b) it is about financing; which is not the case. In reality PFIs are initiated by public sector and financing part is important, but not essential feature of PFI. Many PFIs were financed directly from public budgets even at the investment phase. So the expression indeed is confusing.

In United States expression PFI did not take very deep roots, however Millennium Challenge Corporation under the State Department defines interestingly PFI in the Private Sector Initiative Toolkit as a “Private Financing of Infrastructure” and PFI is a form of the Private Sector Initiative (PSI) among Output Based Aid and Outsourced Management.

I would like to know would you define PFI.