The state-of-the-art building - housing medical records, a boiler plant, a sterile equipment store and a waste incinerator - automatically passed to the hospital when builders Miller Construction defaulted on its side of the contract.

The company had been given until last month to secure an Environment Agency commissioning certificate for the incinerator. When this failed to materialise, Mayday took charge of the building and changed the locks.

And the hospital has even been able to recoup £400,000 in penalty payments for delays in delivering the project.

"We now own the building," confirmed Mayday's chief executive Keith Ford. "Relatively speaking I am happy. Apart from some solicitors' fees (estimated to be in the region of £200,000) we have got the shell of this building and a brand new boiler for nothing."

This is thought to be the first time that a Private Finance Initiative deal has ended in receivership.

When construction started in January 1998, the agreement was to erect a £10 million energy centre that would be built and managed by a private company, MECL.

In return for the capital outlay, Mayday agreed to pay the equivalent of £1million-a-year for the next 22 years.

The deal was seem as attractive to both parties - safeguarding Mayday against any risks and offering the private sectors the lure of profits. Analysts will now be waiting to see if this apparent PFI failure has ramifications further afield. Receivers RSM Robson Rhodes have now been called in and will look into the possibility of recovering some of the money.

A spokesman for Miller Construction said the matter was now in the hands of its lawyers.