Another consortium bidding for a £2.2 billion contract to repair and manage Birmingham's roads has pulled out, casting doubt on whether the scheme will go ahead.
Atkins EDF Energy quit the bidding process for the Highways PFI days after promising to turn the city's arterial routes into green corridors by planting thousands of trees.
The decision leaves only two consortia in talks with the city council - Amey plc and Birmingham Street Services. Balfour Beatty also quit.
Atkins EDF bid director Matthew Elson said: "We have put in a tremendous amount of work to understand Birmingham's highway network and identify the investment required to bring it up to the standard the city deserves.
"We are not proceeding further with this PFI bid but would be very interested to discuss alternative approaches with Birmingham City Council in the future.
"Having reviewed the contract and level of investment, we have taken the view the structure of the business is not right for us."
Events will be viewed with concern by the Government, which has been supportive of the Highways PFI - the biggest in the country. Transport Ministers were hoping Birmingham would set the PFI standard for local authorities.
Although the Department for Transport agreed to hand over £379 million in PFI credits, the offer depends on Ministers approving the contract between the council and private sector partner.
The successful bidder will get a 25-year contract to repair and manage roads, pavements and street lights in Birmingham. The first five years would be spent putting right a 20-year maintenance backlog.
Len Gregory, Birmingham cabinet member for transportation, said he was disappointed at the news.
Coun Gregory (Con Billesley) added: "Obviously with a larger number of consortia you have a better choice. But we shall continue to look at the remaining options in the best interests of Birmingham. I believe, with two bidders left, the PFI is still sustainable."
The value of the highways PFI is £2.2 billion - £800 million more than the council would spend in 25 years. Negotiations between the council and remaining bidders are stuck over the future of the local authority's highways workforce, which would be contracted to work for the winning consortium under PFI rules.
Council leaders want an alternative, with workers seconded but still employed by the council. Such an arrangement would leave the council in control of wages and conditions of employment, cutting into the long term profitability of the contract.
The Amicus union hit out at the "privatisation" of Birmingham roads.
Amicus national officer John Allot urged the council to drop the PFI, saying it was based on a "fundamentally flawed" business case.
Mr Allot said: "The union wants to raise awareness of the flaws with PFI and generate support to keep council services in-house, which will be cheaper, more reliable and maintain residents' control over their city."