CANADA An Intelligence Report
07 16 23 29
The Finance Minister’s PPPs arrive in the Deals that are saving The strength of Canada’s
ambition and pragmatism municipalities taxpayer money financing market
December / Janaury 2010 / 11 • www.infrastructureinvestor.com
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introductory letter 1
CANAdA An Intelligence Report
Report Editor:
Go north
Cezary Podkul
+1 212 633 1456
Cezary.p@peimedia.com
Senior Editor:
andy Thomson
+44 20 7566 5435
andy.t@peimedia.com
In 1851, as legend has it, an American newspaperman named John Soule famously told
Contributor: his countrymen, “Go West, young man”, for that was where opportunity and prosperity
Joel Kranc
was to be found.
Editorial Director :
Philip Borel In the late 2000s, taking a cue from Soule, Europe’s public-private partnership
+44 20 7566 5434
philip.b@peimedia.com (PPP) investors went west in search of riches in the US. Finding few opportunities – and
Editor-at-Large: many liabilities in the form of broken deal fees and idle office space – the time came for
David snow
+1 212 633 1455
a strategic rethink.
david.s@peimedia.com They realised that perhaps a more apt direction would be to head north. For
Senior Writer: Canada is fast becoming a land of opportunity for PPPs – looking poised to outgrow
Bruno alves
+44 20 7566 5446 both its tutor in the UK and its toddler cousin in the US.
bruno.a@peimedia.com
As the leaders of the country’s foremost PPP programmes in British Columbia,
Reporter:
spriha srivastava
Québec, Ontario and Alberta point out, they’ve got a steady pipeline of projects that
+44 20 7566 4288 will need financing.
spriha.s@peimedia.com
Moreover, they tend to stick to their guns: once a decision has been made to bring
Special Projects Manager:
Ram Kumar a project to conclusion, there is very little danger of it going the way of the US’ failed
+44 20 7566 5474
ram.k@peimedia.com 2008 Pennsylvania Turnpike lease. In Canada, deals close: consistently and often.
Head of Production:
And the latest tool for helping PPPs reach completion – the $1.25 billion PPP
Tian Mullarkey Canada Fund – is now up and running, encouraging for the first time numerous
+44 20 7566 5436
tian.m@peimedia.com municipalities to consider PPPs as a way to deliver their infrastructure. There is now
Design & Production Manager: growing federal, provincial and municipal awareness of the benefits of infrastructure
Joshua Chong
+44 20 7566 5433 procurement with the help of private capital.
joshua.c@ peimedia.com
Combined with a buoyant bond market and a growing base of equity players and
Subscriptions & Reprints: institutional investors interested in the country’s PPP sector, you have a solid recipe for
Fran Hobson
fran.h@peimedia.com a PPP market as attractive as any in the world.
+44 20 7566 5444
+1 212 645 1919 [americas] In this intelligence report, you will find plenty of compelling evidence of the
+65 6838 4536 [asia]
progress Canada has made in the PPP sphere. For example between pages 12 and
Sales and Marketing Director:
Paul McLean
15, we focus on the work of provincial PPP organisations and, from page 23 to 26, we
+44 20 7566 5456 feature case studies of some of the most high-profile projects undertaken so far. We also
paul.m@peimedia.com
have interviews with the likes of James Flaherty, Canada’s Finance Minister (p7);
Group Managing Director:
Tim McLoughlin John McBride, chief executive of PPP Canada (p9); and Cynthia Robertson of the
+44 20 7566 5276
tim.m@peimedia.com Canadian Council for Public Private Partnerships (p27). And much more besides.
Co-founders:
After examining all the evidence in the pages that follow, you will likely conclude
Richard O’Donohoe that “Go North, young man” is a sensible instruction.
David Hawkins
Published by PEI Media.
Enjoy the report,
Cezary Podkul
Report Editor
cezary.p@peimedia.com
www.InfrastructureInvestor.com
2 contents december / january 2010 / 11
CANAdA An Intelligence Report
3. IntRoDuCtIon 20. PPP oPPoRtunItIES LISt
Canada today and tomorrow Projects centre stage
What stage has Canada reached in its infrastructure development, We reveal the projects currently in the pipeline across Canada’s
and what are the priorities in the years ahead? provinces
5. HIStoRy of PPPS 23. CaSE StuDy: aLBERta SCHooLS
three decades, three growth eras School’s in
Having begun in the early 1990s, Canadian PPPs have reached their an innovative programme to build 28 schools in Edmonton and
third stage of development – and arguably the most important Calgary saved taxpayers more than $200m and eased overcrowding
7. IntERvIEW: JaMES fLaHERty 24. CaSE StuDy: ontaRIo PoLICE
view from the top How a regional partnership delivered
Canada’s Finance Minister reflects on the launch of the country’s first The Ontario Provincial Police Modernisation Programme showed
Federal-level organisation devoted to promoting PPP projects and how a bundled PPP project could be successfully executed
best practices nationwide
25. CaSE StuDy: MontREaL SyMPHony oRCHEStRa
9. IntERvIEW: PPP CanaDa Hitting the right note
Raison d’etre a first-of-its-kind PPP shows that even music does not lie outside
PPP Canada chief executive John McBride reveals his goals and the bounds of alternative procurement
aspirations for Canada’s newest PPP organisation
26. CaSE StuDy: SoutH fRaSER
12. foCuS: PaRtnERSHIPS BC full speed ahead
Partnering with British Columbia Busy ports lead to busy roads – and, in the case of Vancouver, this
Partnerships BC president and CEO sarah Clark discusses the led to a successful public-private partnership
organisation’s past successes and future plans
27. Q&a: CanaDIan CounCIL foR PuBLIC PRIvatE
13. foCuS: aLBERta InfRaStRuCtuRE PaRtnERSHIPS
Seeking stability in PPPs Mind the municipalities
Ray Danyluk, head of alberta Infrastructure, explains why the ,
Cynthia Robertson, interim executive director of the CCPPP offers
province is focused on capital planning consistency her views on how the political landscape has changed and why
municipalities will pick up the torch from provincial governments
14. foCuS: InfRaStRuCtuRE ontaRIo
Proof is in the pipeline 29. fInanCInG
Why Ontario’s bulging deal roster should attract investors Bright, and getting brighter
With new sources of equity, a strengthening bond market and a
15. foCuS: InfRaStRuCtuRE QuéBEC bedrock of provincial support, Canada is a market with much to
Broader mandate, bigger ambition recommend it
With a $42bn commitment from government and a mandate to
deliver all large projects regardless of PPP viability, big things are Data
expected 31. SELECtED LoanS to CanaDIan PPP PRoJECtS
16. tHE MunICIPaLItIES 33. KEy StatIStICS
Leading the way
Canadian municipalities are increasingly looking to PPPs as a way to
deliver their infrastructure. Winnipeg, Calgary and Regina are to the fore
19. CREDIt RatInGS
Rock solid
With low credit risk and a strong capacity to pay back debts, the
credit ratings of Canada’s provinces impact positively on projects
they host
intelligence report: canada ppp introduction 3
Canada today
and tomorrow
What stage has Canada reached in its infrastructure development and what should its
priorities be in the years ahead? We explore the key themes and dynamics
an InTEREsTIng PHEnOMEnOn occurred in Canada during stated that the government intends to “fund strategic investments
the Great Recession. As the world watched many of its largest in projects designed to produce results in three areas of national
financial institutions and economies teeter on the edge of collapse, importance: a growing economy; a clean environment; and strong
Canadian banks, credit markets and the economy in general and prosperous communities.”
remained relatively unharmed compared with events occurring While these stated goals aspired to lofty achievements by the
south of the border. This is not to say credit markets did not tighten sitting minority Conservative government, trends in infrastructure
and equities decline. Canada was not immune from a variety in Canada are also being driven by outside influences. Issues such
of shocks. However, given the size and scope of the meltdown as immigration; public-private partnerships and their relation to
elsewhere, the Canadian economy remained solvent and viable alternative forms of financing; trade with economies like China and
Modern infrastructure for a Strong Canada
while its banks avoided the kind of defaults and bailouts that India; as well as a growing desire to host national sporting events,
occurred in the US. are all helping change the face of Canadian infrastructure in ways
A by-product of the financial crisis within Canada (not not perceived even a decade ago.
unlike the US) was a renewed interest in government spending
on infrastructure. Government funds, earmarked for large-scale CaTCHIng uP
infrastructure projects, were considered sound creations that would
assist fledgling sectors of the economy regain jobs and financing Since 1961, the percentage of investment in public infrastructure
and bring a general lift in economic fortunes. has been declining as a percentage of GdP, according to the
B
A report released in 2007 by the government of Canada Building Canada report. The percentage of GdP invested nearly 50
uilding whereas, in the blueprint for
years ago was almost 3.0 percentCanada is 2003, it stood below building
entitled Building Canada: Modern Infrastructure for a Strong Canada,
1.5 percent (see graph below Canada — a Canada
a modern and prosperousleft).
Total Investments by All Orders of GovernmentgOVERnMEnT equipped to meet the challenges of the 21st century.
The idea that Canada has under-spent
TOTaL InVEsTMEnTs By aLL ORDERs OF on its infrastructure is shared by some in the
Investment in public infrastructure has been declining as a percentage of gDP
the Building Canada plan is a vision for a stronger,
economic community.
safer and better Canada built upon a foundation of
Glen Hodgson, senior vice-president
and chief economist with infrastructure,
modern, world-class publicthe Conference focused
Board of Canada in stronger economy, a
on national goals for aOttawa, says: “Canada’s cleaner
public infrastructure has been systematically
environment and better communities.
under-invested for a long time…and we’re
Percentage of gDP
finally in catch-up mode.” He goes on to
provides for a federal
Building Canadadeficits and the need to invest-
state that fiscal
balance the books over 1990s years through to
ment of $33 billion in the sevenprohibited
the the largest single governments
2014 — federal and provincialfederal commitment to
from taking action of this type. this historic ini-
public infrastructure and there were simply
no infrastructure issues pressing enough
will head-on. “We’re very and in
tiativetacklesupport the quality good level of public
to
infrastructure that Canada requires to keep pace
Canada at waiting until we have a burning
with the demands of a changing world — a world of
problem,” he adds.
Others in the trade, agree. Sam
competitive global industryincreasing urbanization
1961 1963 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003
and pronounced environmental realities. Strong
Note: Infrastructure is defined as fixed non-residential building and engineering of federal,
Source: Department of Finance Canada
provincial, territorial and local public administrations. and modern infrastructure is an essential building
Source: Department of Finance Canada. block for Canada’s competitiveness and long-term
prosperity for Canadians, whether they live in large
cities or small communities.
4 introduction december / january 2010 / 11
Pollock, chief executive officer of Brookfield Infrastructure Partners by all levels of government. Therefore, the governments must
and senior managing partner at Brookfield Asset Management, a acknowledge that Canada has a serious infrastructure crisis and
global infrastructure and real estate developer based in Toronto, they must attempt to find innovative sources of funding, the best
says: “There has been substantial under-investment in infrastructure one being public-private partnerships.”
in Canada and other developed countries over past decades. In Canada is making up ground within the group of industrialised
many developed countries, major infrastructure projects were built nations when it comes to P3s and its adoption of this type of
during the World War II post-war boom and are in urgent need of financing. Scotia Capital’s Giffen states: “Nearly all provinces have
upgrade or replacement.” adopted P3s as the delivery method for large projects. The provinces
However, that is changing. According to the Conference Board successfully navigated through the credit crisis – so they have
of Canada, the government has increased its capital formation experience adapting to changing times. The federal government
spending from approximately $30 billion* in 2003 to about also appears to be ramping up its programme. So we are optimistic
$65 billion in 2010 (see chart below right). And while this is set that Canada will continue to be one of the leading P3 jurisdictions
to decline somewhat in the years to come, Hodgson says it will globally.”
remain high. “We were already Examples of some of
doing this before the global gOVERnMEnT FIxED CaPITaL FORMaTIOn these partnerships include the
Government Fixed Capital Formation
financial crisis. We realised ($BILLIOns OF CuRREnT DOLLaRs, 2003–12) construction of a large healthcare
($ billions of current dollars, 2003–12)
collectively that we had to do facility (William Osler Health
more. There are cities that have Centre) in Brampton, Ontario
degradation in their water systems, just outside of Toronto; the Royal
so there has been a great spurt Ottawa Hospital, which used a P3
in spending on infrastructure… consortium to help build a more
It’s going to wane a little bit as than $100 million facility with the
the whole infrastructure spending help of a healthcare infrastructure
programme slows but it will stay company; Confederation Bridge,
at a fairly high level because which links Prince Edward
there really is a need for catch- Island with New Brunswick; and
up,” he adds. developments Sources: The Conference Board of Canada; Statistics Canada.
Source: The Conference Board of Canada; Statistics Canada the Canada Line transit project
in the financial sector have in British Columbia. And the
contributed to the waxing and Conference Board’s Hodgson says
waning of infrastructure spending. “One of the most important this will continue to grow. “As the fiscal pressures continue, and it will
trends affecting Canada presently is the budget deficits affecting be particularly true for provinces and cities, they (governments) are
certain provinces. This has resulted in the delay of projects in going to have to find ways to take those risks off their balance sheets
some provinces and a review of project structures in others, with a – whether it’s through delivery or whether it’s through financing and
particular focus on reducing long-term financing costs. That said, operations.”
we remain very bullish on the Canadian market,” notes Matt Giffen, For its part, the Canadian government established a $1.25 billion
managing director, head of global energy solutions and co-head, Public Private Partnerships Fund to support projects providing
global infrastructure finance with Scotia Capital in Toronto. alternatives to traditional government infrastructure procurement.
Additionally, according to the Building Canada report, the
as Easy as PPP government has committed $25 million over five years to establish a
federal P3 office to help facilitate a broader use of P3s in Canadian
With governments trying to cope with deficits and the under-invest- infrastructure projects.
ment of infrastructure, what viable options lie ahead for financing developers and infrastructure operators like Brookfield see the
– and how can Canada hope to improve the infrastructure needs of need for private sector help growing exponentially over the coming
its citizens? years. Brookfield forecasts global infrastructure spending will be $2
The method of financing known as public-private partnership, trillion annually through 2015. Pollock adds that there “must be a
or P3, allows risk and the financial burden of investment to be shift in responsibility for infrastructure ownership from the public to
spread between the public and private sectors. In March 2009, the private sector”.
Professor Saeed Mirza, professor emeritus of Civil Engineering As the investment gap grows, the evolution of infrastructure as an
and Applied Mechanics at McGill University, spoke with the attractive asset class will evolve – and already has. Many large pension
Canadian Council of Public-Private Partnerships – a member- funds in Canada such as the Canada Pension Plan Investment Board
sponsored organisation that conducts research and advocates and the Ontario Municipal Employees Retirement System have made
on infrastructure issues. In that interview, Mirza stated: “… significant investments in infrastructure projects – albeit generally
Our infrastructure needs are way beyond what can be afforded overseas. The market for such investments in Canada remains
intelligence report: canada ppp introduction 5
small, but the country can expect similar interest from pension and was so important. That’s why the development of ports in Vancouver
sovereign wealth funds as project sizes increase. and other parts of the West Coast were so important. That’s why there
The physical make-up of a society has a great influence on how are hubs being developed in Manitoba and Saskatchewan.”
infrastructure is planned as well as the geographic location of where
future projects will be constructed. Two issues currently affecting PLay BaLL
investment are population growth and the changing demographics
of Canada. Besides the changes in population and the economic realities of trade,
In 1979-80, the Canadian population grew by over 314,000 to an entire industry has cropped up that creates the need for heavy invest-
reach a total of more than 24 million. The percentage represented ment in infrastructure. National and global sporting events have grown
by immigration was 45.8 percent, according to Statistics Canada. By as “must have” projects for countries wishing to showcase their strengths
2009-10, the annual population growth by number was very similar to the world at large.
– more than 388,000 to reach the current population of more than The 2010 Vancouver Olympics was a perfect example. According
34 million. However, the percentage of that year’s growth made up to a City Council report, of the $961 million total operational budget,
of immigrants represented approximately 270,000 people, or 69.6 Vancouver spent $729 million on infrastructure and operations. A total
percent. of $73.8 million went to competition venues, including $12.8 million to
What does this mean? Carl Sonnen, president of Informetrica convert the curling venue into a community centre with a pool.
Limited, an Ottawa-based firm specialising in quantitative economic An estimated $120.9 million was spent on non-competition venues,
research, notes: “As a rough guide, one could conclude that like an Olympic streetcar demonstration line, road repairs and the
immigration should be a main reason for adding infrastructure in renovation of theatres.
the next generation.” He hastens to add, however, that fixing the The biggest chunk was for civic infrastructure at the Olympic village
current gaps and recognising the requirement to replace existing site. The city spent an estimated $299.8 million there, including on a
infrastructure will remain a major piece of the puzzle. waterfront park, a community centre, a heritage facility and 252 units
Hodgson adds that an economic shift towards Western Canada of social housing that are supposed to be part of the project.
is taking place. Provinces such as Saskatchewan, Alberta and British Similarly, the Pan/Parapan American Games slated to occur in
Columbia have already become net receivers of immigration and, Toronto in 2015 has hastened infrastructure development on that
while it may not be automatic, public policy may also move west in city’s downtown waterfront. The 80-acre site will be able to house more
terms of infrastructure priorities. Hodgson points to discussions than 8,500 athletes and team officials. The site, known as the West don
underway concerning a high-speed railway between Calgary and Lands, is a brownfield site undergoing remediation of contaminated
Edmonton as a sign of changing population corridors. land damaged by decades of industrial contamination.
The burning question – which remains unanswered for now – is Other facilities in the works include LEEd Gold-certified
how will the combined effects of an aging population, with an influx condominium units as well as a flood protection landform to protect
of new immigrants, alter public policy attitudes? It could mean greater against potential floods from the nearby don River. City, provincial
spending on healthcare and long-term care facilities but a decline and federal efforts are all involved in making this project happen.
in urban transit systems if the working population is aging. These Scotia Capital’s Giffen notes the importance of such projects: “The
questions are part of the debate currently taking place in Canada. advantages of events like the Pan/Parapan American Games is they
create hard deadlines and an impetus for projects that have long
ECOnOMIC InTEgRaTIOn: CHInDIa been talked about.”
“That might be the true legacy of having national sporting events
It’s difficult to discuss immigration policies and their affect on infrastruc- in Canada,” adds Hodgson, “that we see it as an opportunity to build
ture investment without looking at where immigrants are coming from public support for investments in assets that will remain long after the
and the countries Canada does business with. two weeks of the sporting event have finished.”
The Canadian government, in its Building Canada report, Much work still needs to be done if Canada is to continue on
recognises the need for Canada as an exporting nation to create an its economic path that, until now, has helped it survive the Great
integrated and efficient national transportation system. The report Recession relatively unscathed. The changing face of Canada’s
states: “This can be accomplished through targeted investments economic landscape, population and trading partners will all play
in short-line railways and short-sea shipping facilities, increasingly significant roles in how infrastructure growth continues and evolves.
important infrastructure in high-traffic areas such as major market hubs Progress is being made with the help of the private sector. And with
and coastal waterways.” the catching-up phase underway, and the shovels already in the
Hodgson agrees: “People are looking for better ways to link the ground, Canada’s infrastructure path appears to be travelling in
whole transportation supply chain together by virtue of the fact that we the right direction. n
are trading more with [places like] China and India – and that’s going
to keep growing.” He adds that increases in imports from China have * All dollar amounts throughout the report refer to Canadian dollars unless
created the need for specific projects. “That’s why the Pacific Gateway otherwise stated
6 history of ppps december / january 2010 / 11
Three decades,
three growth eras
From the early projects of the 1990s, Canadian PPPs have now reached their third stage
of development - one in which the Federal government is poised to play a greater role in
coordinating private investment in the country’s infrastructure
In 2010, public-private partnerships entered tional PPP projects and another 22 under
their third decade in Canada and, arguably, “Our goal is to construction, followed by British Columbia
the most important phase of development. at 12 operational projects and five under
Canadian governments began delivering
demonstrate to the construction. Alberta had five operational
their infrastructure projects with the help federal government PPPs and another three under construc-
of private capital in earnest in the 1990s.
The decade saw 20 individual projects enter
that it gets better bang tion, while Québec had seven under
construction, according to a PPP managed
procurement as PPPs, with all three levels of for its dollars through by the Canadian Council for Public-Private
government inking their first deals. PPP investment” Partnerships.
On the federal level, the most promi- The provinces’ success caught the eye
nent project was the government’s 1993 of the Federal government, which began
sponsorship of a PPP to design, build and Ontario’s 407 Express Toll Road, which had mulling ways in which it too could support
operate for 35 years a 12.8-kilometre bridge been procured under a PPP agreement two PPPs. In November 2006, the government
linking Prince Edward Island with mainland years earlier. for the first time backed the concept of a
Canada. Prince Edward Island had made “Initially, the decision to undertake PPPs nationwide office to promote PPPs in its
access to mainland Canada a condition of was really a way to try to get some off-balance long-term economic plan. In 2009, such an
joining the Canadian Confederation in sheet financing, which is probably not the office finally found form in PPP Canada.
1867. One hundred and thirty years later, best policy reason,” says Cynthia Robertson, And with it opened the third stage of
when the $739 million Confederation executive director of the Canadian Coun- Canada’s PPP industry, one in which the fed-
Bridge opened for traffic, that condition was cil for Public-Private Partnerships, a trade eral government will take a stronger leader-
fulfilled for good. group that’s been documenting the growth ship role in coordinating private investment
In 1992, Peel, a regional government of the sector since 1993. in infrastructure. A $1.25 billion fund for
outside Toronto, inked the first municipal “But then, other provinces - in particular PPPs helps it do exactly that.
PPP: a $71 million trash incinerator that Ontario, Québec and British Columbia - In 2010, PPP Canada closed the second
turns approximately 160,000 tonnes of resi- recognised that there were some really good round of competition for the fund, receiving
dential waste into energy each year. business reasons for entering into partner- funding requests for 73 proposals across
ships with the private sector,” Robertson 11 provinces and territories. By the end of
a SERIES of fIRStS adds. These included the cost savings and 2011, it expects to see $300 million of the
efficiency gains demonstrated by some of fund committed, according to chief execu-
But it was the provinces that really led the the provinces’ early projects. tive John McBride.
way in PPPs during the 1990s. Nova Scotia This realisation propelled PPPs into “Our goal is to demonstrate to the
procured the first provincial highway PPP their second stage of development: the federal government that it gets better bang
in 1994, a 45-kilometre section of the creation of central procurement agencies for its dollars through PPP investment,”
TransCanada Highway in northern Nova and centres of excellence to move projects McBride says. “And if we can do that – which
Scotia, followed by the first PPP for school forward. Alberta created the first such body I think we are, and will – then I expect that it
construction in 1997. That same year, New in 1999. British Columbia followed in 2002, will make the logical decision to put more of
Brunswick procured the first provincial Québec in 2004 and Ontario in 2006. its funding through the PPP mechanism.”
healthcare facility, a 50-bed psychiatric ward Together, these four provincial pro- In other words, as long as PPPs keep
in Saint John. And the decade ended with grammes powered the growth of the PPP delivering the same value they have, there
what is still the biggest infrastructure deal in industry throughout most of the 2000s. As will likely be a bright future for them in
Canadian history – the $3.1 billion lease of of November 2010, Ontario had 21 opera- Canada. n
Infrastructure Investor Intelligence Report: Canada PPP
intelligence report: canada ppp james flaherty interview 7
View from the top
The creation of a nationwide organisation to oversee and promote PPPs was part
ambition, part pragmatism, according to Canada Finance Minister James Flaherty.
He also reflects on the rationale and successes of PPP Canada Fund
In 2008, CanaDa’S Ministry of Finance support to PPP projects that broadly fall
created PPP Canada, the country’s first within its trade-space mandate.
Federal-level organisation devoted to
promoting public-private partnership (PPP) WHERE DID THE IDEa COME FROM TO
projects and best practices nationwide. CREaTE a PPP FunD anD PPP CanaDa?
James Flaherty, the man in charge,
shares his views on what motivated the JF: We committed in Advantage Canada, our
organisation’s creation and what he hopes to long-term economic plan, to establish a
accomplish. federal PPP office so that we would become
more proactive in leveraging the assistance,
HOW DID THE FInanCIaL CRIsIs IMPaCT expertise and capital of the private sector
THE CanaDIan gOVERnMEnT’s in meeting Canada’s infrastructure needs.
OuTLOOK On InFRasTRuCTuRE PPP Canada was created to help protect
InVEsTMEnT anD PPPs? taxpayers from future costs, encourage good
project management, increase the pool of
JF: Canada has launched an extremely capital available for infrastructure, help
ambitious infrastructure stimulus plan, expand the market for PPPs in Canada,
with more than 40 percent of the total and offer new investment opportunities for
stimulus funding devoted to infrastruc- domestic investors such as pension funds.
ture investment. The government has
committed close to $11 billion towards WHaT PERCEnTagE OF CanaDa’s TOTaL
approximately 8,000 provincial, territo- InFRasTRuCTuRE nEEDs Can BE MET
Flaherty: increased funding not sole remedy rial and municipal infrastructure projects sOLELy WITH FEDERaL sOuRCEs suCH
since the launch of Canada’s Economic as THE gas Tax?
Action Plan. Combined with contribu-
tions from other partners, these projects JF: No single level of government can ad-
represent a total investment of over $33 dress this country’s infrastructure needs.
billion in infrastructure. With over 90 percent of the public infra-
In addition, to ensure the smooth structure in Canada owned at the provin-
functioning of the PPP market during the cial, territorial and municipal level, we
financial crisis, the government took action need to work in partnership to modernise
to maintain the availability of traditional our infrastructure.
sources of financing from banks and other Infrastructure challenges in Canada
financial institutions. For example, Export cannot be solved solely through increased
development Canada is working with private funding. Most municipalities stand to gain
sector financial institutions to provide credit from engaging in structural reforms, such
8 james flaherty interview november 2010
december / january 2010 / 11
as better long-term capital planning. The federal government is 2007 the government launched the Building Canada Plan to deliver
actively promoting the efficient use of infrastructure and available flexible and predictable funding to provinces and municipalities
funding through a range of best practices, such as long-term capital to help them plan for the longer term, and address their ongoing
planning, life-cycle costing and cost-benefit analysis. There are also infrastructure needs.
considerable opportunities for PPPs. Building Canada priorities include investments in infrastructure
that contribute to increased trade, efficient movement of goods
HOW MuCH TOTaL InVEsTMEnT In InFRasTRuCTuRE DO yOu and people, and economic growth. This includes projects such
HOPE TO LEVERagE WITH THE $1.2 BILLIOn? as improvements to the core National Highway System, short-line
railways, short-sea shipping, regional and local airports, broadband,
JF: We expect the $1.2 billion PPP Canada Fund to directly leverage and convention centres.
$5 billion in PPP infrastructure investments in Canada. On top of Building Canada, the Government provided
The PPP Canada Fund is the first of its kind in Canada. It is significant funding for new initiatives to modernise Canada’s
a merit-based process which directly targets PPP projects. We are transportation infrastructure in recent years, including investments
seeing encouraging signs that the PPP Canada Fund is influencing a made under the Economic Action Plan and in Budget 2010.
significant amount of PPP activity across the country, far in excess of
the direct leverage of the fund’s funding contributions. THE PPP CanaDa FunD Has gEnERaTED sTROng InTEREsT
FROM MunICIPaLITIEs FOR sMaLL, LOCaL PROJECTs. Was THIs
WHaT aRE THE sTRIngs THaT aRE aTTaCHED yOuR InTEnDED auDIEnCE?
TO PRIVaTE InVEsTORs WHEn THEy LOOK TO
aCCEss a PORTIOn OF THaT $1.2 BILLIOn? “Canada has launched JF: In my view, increasing municipal inter-
est in PPPs is a very positive development
JF: To date, the PPP Canada Fund has prima- an extremely ambitious in the Canadian PPP market.
rily been geared toward helping provincial and infrastructure stimulus
municipal governments with the affordability of
their capital infrastructure needs. To be eligible
plan, with more than HOW WILL yOu gaugE THE suCCEss OF
THIs FunD 5 OR 10 yEaRs FROM nOW?
for a PPP Canada Fund investment, the infra- 40 percent of the total
structure project must be procured and support- stimulus funding JF: The success of the PPP Canada Fund
ed by a public authority. will be in the extent to which it leverages
Unlike other Canadian infrastructure devoted to infrastructure more PPPs and better PPPs across the
funds, the PPP Canada Fund is specifically investment” country.
tied to the procurement of PPP projects. PPP
Canada considers the following criteria when Was IT a HaRD sELL gETTIng THE
assessing project submissions: eligibility; public LEgIsLaTuRE TO BaCK THE IDEa OF a
benefit; market readiness; market development; PPP value for FEDERaL PPP OFFICE?
money; procurement strategy and processes; scope of private sector
involvement; and revenue potential. In sum, this means both quality JF: In the Budget presented to the House of Commons on March 19,
public infrastructure and quality PPPs. 2007, the government announced key measures to promote the use
of PPPs in Canada. The Budget was passed in the House of Commons
FROM a FEDERaL PERsPECTIVE, WHaT aRE CanaDa’s with the support of the opposition. n
PRIORITIEs FOR InFRasTRuCTuRE DEVELOPMEnT?
James M. Flaherty is a second-term Member of Parliament for Whitby–
JF: The government understands the importance of public infra- Oshawa (Ontario). He serves as Canada’s Minister of Finance and Minister
structure in supporting a stronger economy, a healthy environment, Responsible for the Greater Toronto Area. He is a Governor of the World Bank
and in the development of strong and prosperous communities. In and the International Monetary Fund
intelligence report: canada ppp ppp canada interview 9
Raison d’etre
John McBride reveals his goals and aspirations for Canada’s newest PPP organisation,
PPP Canada
McBride: PPPs no longer ideological
CHaTTIng WITH JOHn McBride, one quickly expertise to and from Canada.
gets the feeling he is right at home at the helm “The experience of other countries, the UK
of PPP Canada. Twenty years ago, while working and Australia, were very instructive,” he says.
for the government in Ottawa, he helped arrange “But I think we’re at the stage now where we’ve
financing for the $739 million Confederation adapted them to our context.”
Bridge, the first public-private partnership (PPP) That is, PPP Canada isn’t just the name for
procured by the Federal government. Now, at an organisation: it’s a way of procuring public
PPP Canada, his job is to replicate that success all services that’s becoming increasingly ingrained
across the country. in the country’s business and political dNA.
“We focus at the Federal government level on Canada can now claim a whole cottage industry of
the same issue: trying to deploy PPPs where they engineering and procurement firms like AECON,
make sense,” he says. The goal is not to be the Bombardier and SNC-Lavalin who have “cut their
“national end-all, be-all” for PPPs, but instead “a teeth” on PPPs in other countries, McBride says.
node and a network that helps connect everybody That’s to say nothing of its deep-pocketed
together”. pensions that have been investing in
Another Federal agency he headed, the infrastructure since before the word became a
Canadian Commercial Corporation, connected household name during the Great Recession.
Canadian exporters together with importers in And, most importantly, its provinces have
other countries. That often translated to trade welcomed private investment by setting up their
missions focused on importing and exporting PPP own programmes to channel public resources to
10 ppp canada interview december / january 2010 / 11
the best use through PPPs whenever they make payment projects. Under this form of financing,
sense. governments reimburse private developers for
“The successful experience of provinces was one their construction costs once the infrastructure
of the prompts that drove the federal government to project they’ve been hired for is substantially
[create PPP Canada],” McBride says. complete. They then get an ongoing stream of
payments for a fixed period, typically between
BORn DuRIng, nOT OuT OF, CRIsIs 20 and 30 years, so long as they keep the project
available in good condition to the public. All
It all began in November 2006, when the concept of this, of course, takes money – money which,
of developing an office to promote PPPs was first thanks to increasingly tight fiscal circumstances,
introduced in Advantage Canada, the long-term is increasingly scarce.
economic plan of the government of Canada.
By the time the idea made it through the COMPETIng FOR LEVERagE
budgeting process and PPP Canada was officially
incorporated (February 2008) and opened Not surprisingly, during its first round of competi-
for business (September 2009) the Canadian tion for funding in September 2009, PPP Canada
economy had dipped into recession and received 20 applications from various provincial
infrastructure spending was emerging as a major and territorial governments. By the time PPP
cure for the malaise. Canada closed the second competition in June
McBride cautions this was merely 2010, it had received 73 proposals for projects in
coincidence, not causality. 11 provinces and territories.
“It wasn’t related to the economic crisis,” “We had an overwhelming response,” says
he says. “It was driven in the first instance by McBride.
the desire to invest in infrastructure for the well At stake is a commitment of up to 25 percent
being of Canadians, not originally as a stimulus of the value of a project’s direct capital costs
plan.” from the PPP Canada fund. “In some cases, we’re
PPP Canada is nevertheless contributing to contributing less if that’s not required to make
economic development and growth through the project go,” McBride says.
the commitment of its PPP Canada Fund, a The goal isn’t to supplant municipal and
$1.257 billion pot of money aimed at stimulating provincial money but instead to leverage it by
a factor of three-to-one. “If
we’re putting in 25 percent
“The experience of other countries, and they’re putting in 75
percent,” reasons McBride,
the UK and Australia, were very “that will multiply” PPP
instructive,” he says. “But I think we’re Canada’s $1.257 billion to $5
billion.
at the stage now where we’ve adapted Take the Chief Peguis
them to our context” Trail in Winnipeg, Manitoba.
due to lack of necessary
funds, Winnipeg originally
designed the four-kilometre
infrastructure development by complementing road extension without an underpass, which
municipal and provincial resources for PPP had been flagged by the local community as a
projects. priority due to safety concerns. But in July 2010,
It’s a first-of-its kind fund at the federal PPP Canada unveiled a $25 million commitment
level. And its timing could not be better. In for Chief Peguis Trail from the first round of
Canada, PPPs tend to be structured as availability funding from its PPP fund.
intelligence report: canada ppp ppp canada interview 11
“With their funding, we were able to do the underpass,” said
“They’re driving on the road, they’re Michael Ruta, chief financial officer of the city of Winnipeg. Winnipeg
will contribute $74 million toward the project and Manitoba will chip
going to the hospital and actually the in up to $9 million.
hospital works. It’s better” “We are leveraging $83 million of other jurisdictions’ money,”
says McBride. And that’s precisely how, “as a minimum”, he hopes to
achieve the three-to-one leverage on PPP Canada’s $1.257 billion.
A total of $100 million has already been committed from the fund.
And by the middle of next year he expects to be “approaching $300 million committed”.
REasOns FOR OPTIMIsM
If that sounds ambitious for an organisation hardly a year old, that’s because McBride finds no shortage of op-
portunities for investment at the moment.
“The primary focus of PPPs in Canada to date has been the health sector, schools, correctional, police facilities
and roads and bridges. That pipeline continues,” he says. But it’s also being broadened to additional sectors.
For example, one of the other winning bidders for round one of funding was a shared emergency
radio system for the provinces of Nova Scotia, New Brunswick and Prince Edward Island. PPP Canada Fund
committed up to $50 million toward the telecommunication project, which “isn’t the normal brick-and-
mortar sector people think of when they think of PPPs,” says McBride.
And that’s just the beginning. “We’re seeing interest in the energy field, renewable energy in particular.
We’re seeing interest in the rapid transit areas. We’re seeing interest in the water and wastewater areas,” he
says. And the list goes on.
Moreover, it’s not just provinces vying for the money. Among the 73 round two funding applicants
were 35 municipalities and 13 Native Canadian communities. “We are seeing increased interest from those
jurisdictions,” says McBride. Their interest gives him great satisfaction
QuICK FaCTs aBOuT PPP CanaDa because one of the things he’d like to accomplish in his time at PPP
Canada is capacity-building for the PPP market, or building up PPP
MISSION: Manage the $1.257bn PPP Canada Fund skills among governments that have yet to do their first projects.
He’s optimistic governments will continue to remain interested
Screen whether applicants for other in building up their capacity to deliver PPPs. That’s because PPPs,
Federal funds rigorously considered PPPs he believes, have become a non-ideological issue in Canada. “I think
as an option for projects over $50m PPPs used to be an ideological debate about, you know, ‘private sector
good, public sector bad’. Now they’re becoming a debate around what
Advise the Federal government and delivers best for the taxpayer.”
provinces on their PPP programmes “They’re driving on the road, they’re going to the hospital and
actually the hospital works. It’s better,” he says. “Nothing to be scared
Act as a centre of excellence for PPPs of – they just want what works.” n
nationwide
LAUNCH OF PPP 2009 “We’re seeing interest in the energy
CANAdA FUNd:
field, renewable energy in particular.
LOCATION: Ottawa We’re seeing interest in the rapid transit
SENIOR John McBride, CEO; Greg Melchin,
areas. We’re seeing interest in the water
MANAGEMENT: Chairman of the Board and wastewater areas”
12 focus: partnerships bc november 2010
december / january 2010 / 11
Partnering with
British Columbia
Sarah Clark, the new president and chief executive officer of Partnerships BC, discusses
the key reasons behind the organisation’s past success in PPPs and its plans for the future
Blain led Partnerships BC since its on how best to procure the project. All
creation in 2002 as a government-owned projects over $50 million in capital cost are
company. The goal was to teach the public given automatic review to see whether they’d
sector “to look at alternatives, new ideas and be better off being procured as PPPs. If they
fresh solutions”, former British Columbia are, they go to the board of the province’s
Finance Minister Gary Collins said in a treasury for approval. Approval in hand,
statement when he announced its creation. Partnerships BC then begins the project’s
“We had a number of projects that had procurement.
been talked about for years and hadn’t been “We don’t put out an RFQ without
completed,” recalls Clark. Once Partnerships having the approval to be able to finish a
BC was created, “projects finally entered project,” she says. “We finish the projects that
the market and were completed on time or we start.”
ahead of schedule, and on budget”.
OPTIMIsE, nOT MaxIMIsE
$10Bn OF PROJECTs
Clark says her goal isn’t to maximise
Clark: taking advantage of low-cost borrowing
Since 2002, Partnerships BC has delivered the amount of private capital going into
saRaH CLaRK DIDn’T need any convincing 35 projects worth $12.5 billion to British infrastructure – in some cases, private
of the merits of delivering infrastructure via Columbians, according to the provincial financing is not the best delivery option – but
PPPs. As a project manager at Bombardier in government. This includes approximately $5 to optimise it.
the early 2000s, Canada’s rail and aerospace billion in private capital. “We can take advantage of the low cost
manufacturing giant, she developed bids for Projects include the aforementioned of borrowing that we have here to reduce
multiple business opportunities – including $1.9 billion Canada Line, the $600 million the impact of the cost of private financing
Vancouver’s recently opened Canada Line improvement to the Sea-to-Sky highway while still getting the benefits from it,” she
rapid transit link. linking Vancouver with Whistler mountain, says, referring to British Columbia’s AAA
“I realised, on the bidder side, how the site of the 2010 Winter Olympics, and credit rating. British Columbia has done
different your thinking becomes when you the picturesque $130 million Kicking Horse that by providing payments toward some
have an investment in the infrastructure for Canyon highway replacement. projects, which reduces the overall amount
the longer term. And I thought, ‘wow, what Partnerships BC has developed so of private sector capital needed. These so-
a great model to have the people who are much expertise in PPPs that its services are called “provincial milestone payments” are
designing and building it also responsible for now sought outside its borders. Though being used, for example, on the South Fraser
operating and maintaining the asset over a she declines to name any specific clients, Perimeter Road project in Metro Vancouver.
fixed term of 20 to 30 years,’” she says. Clark says Partnerships BC has advised the Going forward, Clark expects to
Now Clark, an engineer by training, Canadian government and other Canadian continue to see a strong project pipeline in
evaluates all future provincial infrastructure provinces on PPPs, as well as one US county. British Columbia. “Over the next few years
projects over $50 million in cost across the The recipe to Partnerships BC’s success it’s anticipated we’re going to probably have
province of British Columbia. In October, is open dialogue between its clients, the three-to-four a year [PPPs],” she says.
after five years in a senior project delivery various governmental ministries in British “We see right now more health and
role at Partnerships BC, British Columbia’s Columbia, and the private sector. Once a transportation, we see more possibilities in
procurement body for PPPs, she took over government body, such as the Ministry of energy and wastewater, possibly even waste
the organisation’s top job from former head Health Services, comes up with an idea for a to energy,” she says. “Those are certainly all
Larry Blain. project, it goes to Partnerships BC for advice good applications.” n
Infrastructure Investor Intelligence Report: Canada PPP
intelligence report: canada ppp focus: alberta infrastructure 13
Seeking stability in PPPs
The Province of Alberta pursues PPPs not just for their cost and efficiency savings
but also to give some consistency to its capital planning needs
sector, Alberta’s revenues are subject to wide to Alberta’s Treasury Board. Alberta
fluctuation. That makes it hard to commit Infrastructure then does the research
to a set level of infrastructure maintenance, to determine whether a PPP would be
design and construction well into the future. an appropriate delivery mechanism – its
mandate expanded into PPPs in 2003. If
PLannInG CaPItaL nEEDS PPP is the right approach, and the Board
approves the funding, then work gets under
“Commodities go up and down,” danyluk way, with one guiding principle in mind:
says. “And if you look at infrastructure, if “the Premier has a commitment to the most
you try to go up and down and build when advanced infrastructure in North America,”
the mood is high and the profits are there, danyluk says. “It is infrastructure that works
what ends up happening is, when there is no for the people who use the facilities, work in
funding, you’re not building.” the facilities.”
Danyluk: more bundled projects on the way “So this province and this government
feel it is extremely important to be stable,” BuILDInG BLoCKS
IF OnE WERE to pick a Canadian province he adds.
that doesn’t need to deliver its public Part of that stability comes from a $17 This commitment was on full display during
infrastructure via PPPs, it would almost billion so-called Sustainability Fund set up the recent Alberta Schools Alternative
certainly be Alberta. Armed with a $17 by Premier Ed Stelmach in 2006. The fund, Procurement (ASAP). To accommodate
billion reserve fund and an AAA credit seeded with the province’s share of oil and future shifts in population and education
rating, Ray danyluk, the head of Alberta gas revenues, helps Alberta plan its capital demand, the province required bidders
Infrastructure, the province’s infrastructure needs 20 years into the future with the to design schools with classrooms that can
delivery office, could certainly just have his knowledge that it will have the cash on hand be picked up, wheeled to another school
team pick up the shovel and deliver the to support the investment. and connected up to the building like
school, hospital or road with public money. “It’s like a savings account,” danyluk says. a Lego block. There were 210 of these
But he chooses not to. For PPP investors, who often worry about so-called high-performance classrooms in
“We got into PPPs in order that we appropriation risk, or the possibility that the first ASAP, which was won by Amber
had some longevity to the lifecycle cost the government they’re working with won’t Infrastructure.
for our buildings,” he says. A long-term honor future payments, that’s a major selling danyluk says investors can expect more
maintenance contract under a PPP “gives point. bundled projects like ASAP in the future.
some consistency to the people who are “As a financing party, you always look A third set of schools is being considered
building it, gives cost and schedule certainty at the credit rating of your counterpart, for a PPP, he says, and the province is also
to the government and it really gives which, for the province, is AAA,” explains considering PPPs for courthouses and health
stability and predictability to our contractual Stefan Parche, president of North care facilities. danyluk says he’s also been in
agreements,” he adds. American operations at PPP investor Amber discussion with industry participants to see
Stability may not seem like a big reason Infrastructure. “It’s a really, really good if there’s a way to pursue PPPs for projects
to pursue PPPs – people elsewhere trumpet counterparty to work with.” below the $100 million threshold typical for
their efficiencies and cost savings – but in Another key reason for Alberta’s PPP consideration.
Alberta it’s an important hedging tool that embrace of PPPs is simply the scale of the “We’re investigating all of that,” says
helps the government plan its capital needs ambition in infrastructure. It’s the various danyluk, adding: “Infrastructure is truly
into the future. With nearly one-third of its ministries, such as Education in the case something we believe is important for this
GdP in 2008 coming from the oil and gas of schools, that propose the projects province and this country.” n
14 focus: infrastructure ontario november 2010
december / january 2010 / 11
Proof is in the pipeline
Infrastructure Ontario has closed more than 35 projects since its inception in 2005. And
with another 14 projects now in procurement, Vas Georgiou, senior vice president of
project delivery, says the province’s pipeline is the ‘proof in the pudding’ for why investors
should come to Ontario
JusT as an investor wishing to do busi- The latter have included marquee pro-
ness in Quebec would do well to pick up curements such as the $334 million dur-
some French, anyone hoping to bid on ham Consolidated Courthouse, the $594
one of the nine PPPs coming to market million Toronto South detention Centre
in Ontario in the next 12 months would and the recently-closed $293 million On-
do well to pick up a few new words. In tario Provincial Police modernisation.
Ontario, the name of the game is AFP, “I think our track record is probably
short for “Alternate Financing Procure- the proof in the pudding,” he says. “We’ve
ment” – not PPP. got more than 35 projects closed. I don’t
“A lot of people joke and say, ‘oh, it’s know of any jurisdiction in the world that,
just another way of describing PPP,’” says in the last four years, has closed that many
Vas Georgiou, senior vice president of projects.” This includes projects across all
project delivery at Infrastructure Ontario, of Infrastructure Ontario’s forms of pro-
the province’s infrastructure procurement curement (not just PPP) and represents
Georgiou: a busy man
body. “The reality of it is we are more an estimated $15 billion worth of capital
than just a PPP financing body – we have costs, according to a recent presentation.
looked at different approaches to public more build-finance,” says Georgiou. But as Looking forward, Georgiou sees an
procurement and how to select our private its mandate expanded and larger projects even stronger pipeline of opportunities
sector partners,” he adds. came to market, Infrastructure Ontario as the province upgrades is highways,
In 2005, when Infrastructure Ontario began looking more toward the design, transit system and prepares for the 2015
was first created, its founding team came build, finance, maintain model, which Pan-American Games in Toronto. In June
up with two core models of procuring is used primarily for the delivery of new 2010, Infrastructure Ontario issued a
projects: “build finance” and “design, facilities costing more than $50 million. request for qualifications for the extension
build, finance, maintain”. “Some refer to that at the PPP,” of Ontario’s Highway 407. Infrastructure
In the former, the province provides he says. “But we have, since our incep- Ontario is also working with a provincial
the general design for a piece of infra- tion, been flexible and tweaked a few agency, Metrolinx, to scope out potential
structure and asks a contractor to deliver other models and scenarios. That’s why transit projects such as subway extensions
it for a fixed price at a fixed date. So if we’re known as Alternate Financing and in southern Ontario. And, as the official
it takes, say, 36 months instead of 34 to Procurement, because we’re open to the procurement body for Toronto’s 2015 Pan-
deliver a project, the contractor has to eat alternate.” American Games, Infrastructure Ontario
the two months’ worth of construction For example, for three hospitals in has issued the request for qualifications
cost. Sault St. Marie, North Bay and Woodstock, for athletes’ village and aims to bring the
“They’re putting in the construction the province’s ministry of health had aquatic centre and stadium to market in
financing because we don’t pay a penny already designed them. So Infrastruc- the next 12 months.
until the keys are delivered to us with a ture Ontario structured the contract as a With some 20 projects in procurement
finished product,” Georgiou says. As a “BFM”, or build-finance-maintain contract. just now, Georgiou isn’t shy about asking
result, “our projects for the most part, I’d But rather than making an alphabet investors to come to Ontario.
say nine out of ten of them are finishing soup, Georgiou sticks to the two “pillars” “We probably have double what the rest
on schedule or shorter than schedule.” of build-finance and design-build-finance- of the country has in its pipeline on our
Ontario uses build-finance procure- maintain. About one-third of the prov- books as we speak and I don’t think there’s
ments more for smaller projects where ince’s projects have been build-finance, a lot happening on the public infrastruc-
an existing facility is being upgraded or and two-thirds design-build-finance-main- ture side of things south of the border,” he
expanded. “I’d say in the early days we had tains, he says. says, referring to the United States. n
Infrastructure Investor Intelligence Report: Canada PPP
intelligence report: canada ppp focus: infrastructure québec 15
Broader mandate,
bigger ambition
Armed with a $42bn infrastructure commitment from the government and a new mandate to
help deliver all big projects regardless of their PPP viability, Infrastructure Québec’s Normand
Bergeron expects a robust pipeline of projects to keep developers busy in the coming years
nEsTLED In BETWEEn Ontario and Brit- without PPP projects, it would have noth- University Health Center, Infrastruc-
ish Columbia population-wise, Québec, ing to do. ture Québec decided it would be best
is perhaps an uncomfortable fourth in So in december 2009, Québec’s procured under a design, build, finance
terms of closed PPP projects that it’s National Assembly passed a bill which contract, not as a full PPP.
delivered. But Normand Bergeron, the broadened Infrastructure Québec’s man-
chief executive of Infrastructure Québec, date beyond PPPs. The bill conferred oPPoRtunIty
the province’s infrastructure procure- on Infrastructure Québec all the powers
ment body, has plans to catch-up. of its PPP predecessor, plus the respon- despite this, the province is firmly mov-
It begins with a firm commitment sibility to work with public agencies ing ahead with PPPs for health care
from the government. In 2008, Québec to prepare a business case for all their facilities. In May, Infrastructure Québec
agreed to spend $42 billion upgrading projects over $40 million, regardless of closed its first PPP in the healthcare sec-
its infrastructure over five years – money delivery mode. tor, the $470 million Montreal University
which Bergeron believes will finally lead “When you give us a broad mandate, Hospital Research C enter. That was
to pipeline of viable PPP candidates. we are more objective than when you followed in July by financial close on the
“We expect 25 projects by year,” he suggest ‘PPP’,” Bergeron says of his new McGill University Health Centre, a $1.3
says. Those will be all the projects that responsibilities. “We are asked to choose billion, 500-bed health care facility in
will cross the $40 million threshold at the best mode of realisation for each Montreal. The McGill project featured
which Infrastructure Québec is tasked project,” he asks. the largest-yet issuing of senior bonds for
with determining the best mode of The assessment begins when one a PPP project, $764.1 million.
delivery. Of the 25 candidates each year, of the provincial ministries comes to Bergeron sees more healthcare facili-
about one out of every four will be deliv- Infrastructure Québec with an idea for a ties in the pipeline because generally
ered as PPPs, according to an estimation project. Infrastructure Québec will ana- many hospitals in the province are 50
done by Infrastructure Québec. lyse the project and come to a conclusion years or older. “We must refresh or build
“We expect between five and about how much it will cost and whether new hospitals,” he says.
ten projects to be delivered by PPP,” it should proceed as a PPP or through Bergeron also believes “transporta-
Bergeron says. a traditional delivery method, such as a tion will be very huge for the next ten
Another element giving him opti- design-build contract. It will then present years”, starting with the billion-plus
mism is Infrastructure Québec’s new its findings to a nine-member board, reconstruction of the Turcot highway
mandate. When it was originally cre- which is composed of five public sector interchange in Montreal.
ated in 2005, Infrastructure Québec’s representatives, three private-sector Leisure-related infrastructure will
sole focus, as suggested by its previous representatives and Bergeron himself. also be important because Québec City
name, PPP Québec, was PPP delivery. If a If the board approves the project to go plans to apply to host the 2022 Winter
project wasn’t going to be delivered as a forward as a PPP, Infrastructure Québec Olympic Games, for which it will need a
PPP, it wasn’t going to get involved. The then begins a procurement for a private multi-functional sports stadium.. And the
approach resulted in only seven closed partner. repairs to Montreal’s existing Olympic
PPP projects. Bergeron cautions that size is not an Stadium are being considered for a PPP
And even getting to seven wasn’t easy. “automatic” indicator of PPP delivery. delivery approach.
Critics such as labour unions charged For example, in July, the premier of If even a few of these projects end up
that, as a PPP-only organisation, Infra- Québec announced a new children’s’ going forward, Bergeron’s PPP rankings
structure Québec was predisposed to hospital for Québec City. After analys- may soon move up to par with Québec’s
support PPP procurement. After all, ing the $564.3 million Sainte-Justine population. n
16 the municipalities december / january 2010 / 11
Leading the way
Looking to make the most out of every dollar, Canadian municipalities are increasingly
looking to PPPs as a way to deliver their infrastructure. Winnipeg, Calgary and Regina are
among the cities at the forefront of the trend
CanaDIan MunICIPaLITIEs aRE quickly waking up to the possibili- ing and maintaining their assets. After all, capital budgets could be
ties of better delivering their infrastructure needs via public-private deferred or postponed, while operating budget needs had to be
partnerships (PPPs). during the second round of competition for dealt with immediately.
the $1.25 billion PPP Canada Fund, for example, nearly half of the The neglected capital spending snowballed into what the Fed-
73 applications were for municipal projects. eration of Canadian Municipalities estimated in 2007 to be a $123
This strong interest should come as no surprise. As the Federation billion municipal infrastructure deficit.
of Canadian Municipalities observed in a 2006 report, Canada’s cities With this in mind, Infrastructure Investor surveyed several munici-
have been saddled with increasing responsibilities – everything from palities to get their thoughts on where PPPs fit into their infrastruc-
affordable housing to emergency preparedness to day care – while fall- ture renewal strategy and what their pipelines look like for future
ing transfer payments from other levels of government and increas- projects.
ingly unreliable property taxes have eaten away at their revenues. As evident from these three municipalities’ stories, there is no
As a result, the country’s municipalities – which build, own and shortage of need for PPPs. It’s simply a matter of putting together the
maintain the majority of Canada’s infrastructure – spent less upgrad- expertise and capital needed to make them happen.
WInnIPEG: PROVIded THe ROAd BeNCHMARk
WInnIPEg Is TO Canada what Chicago is to the US: the city has
closed more PPP transactions than any other in the country.
It all began in 1995 when Manitoba’s capital city signed a con-
tract to have a private partner to build and maintain the city’s Char-
leswood River Bridge for 30 years.
“It’s the standard to which all new road projects are bench-
marked in Winnipeg,” says Michael Ruta, the city’s chief financial
officer.
In 2010, the city added two more road projects to its PPP roster:
$108 million Chief Peguis Trail extension, which reached financial
close in October; and the $195 million replacement of the city’s
disraeli Bridge over the Red River, which reached financial close
in March.
Winnipeg’s only non-road PPP – a $12 million police station –
broke ground in 2007 and become operational in 2008. The city
announced on the day of launch of the East district Police Station
that its construction was “the fulfillment of an election promise by
Mayor Katz to use PPPs to save time and money in infrastructure
construction”.
In October, Mayor Katz got reelected to his third term as Win-
“Unless we are able to request that nipeg mayor. And, thanks to a $7.4 billion infrastructure need iden-
council increase the cap, or make some tified by the city last year, saving money in project delivery is still a
priority. But it looks like Winnipeg will tread carefully in picking
other adjustments, we might be restricted out its next PPP project.
by that cap in the future” For one, Winnipeg places a cap on how much money it can
devote to PPP financing in annual availability payments. Its two
main sources for the financing are cash contributions for capital
intelligence report: canada ppp the municipalities 17
projects and the city’s share from the federal gas tax. PPP payments “It’s [a] very sensitive [issue] in Winnipeg,” Ruta says.
are capped at 30 percent of the sum of the two. Still, several PPP candidates may convert to real opportunities in
“We’re pretty close to the cap,” says Ruta. “So unless we are able the next few years. For one, Mayor Katz has been supportive of ex-
to request that council increase the cap, or make some other adjust- ploring a PPP to deliver a new light rail transit system for Winnipeg.
ments, we might be restricted by that cap in the future.” And, working off the success of the East district Police Station, Win-
Another limiting factor is that public opinion in Winnipeg isn’t nipeg is also considering bundling together three police buildings
uniformly favourable toward all types of PPPs. Road projects, like into another police PPP.
the three the city has already closed on, are popular with the public. “We’ve got a few things under consideration but nothing con-
But wastewater projects – where the city’s need for new investment crete at this point,” Ruta says. n
is rising – are less favoured.
CaLGaRy: MeeTING POPuLATION GROWTH
THIngs aRE DIFFEREnT in Calgary, Alberta. The city of more than “The traditional way of building
one million is putting together a pipeline of several projects, one of
which is in the advanced stages of planning and may be tendered these things is one at a time and
soon. we thought PPP might work as a
It all starts, though, with the need. The city’s population has
swelled by some 500,000 in the last 20 years, thanks in part to the oil model to help deliver these things
and gas boom that drew people to Alberta in search of jobs. much faster”
“It’s pretty difficult to keep up with growth at that rate without
incurring a lot of debt or raising taxes, neither of which we wanted
to do,” says Calgary deputy Treasurer Rick Masters. ditional way of building these things is one at a time and we thought
So in 2007 the city began exploring PPPs as an alternative form PPP might work as a model to help deliver these things much faster.”
of project procurement. The goal was to establish a “working docu- The city thought they’d need up to seven fire stations plus a
ment” that could “survive” changes in city councils and give Calgary headquarters building. But with a slow-down in Calgary’s growth,
a set of policies to point to in pursuing projects, Masters says. and a value for money analysis that was “kind of neutral”, Masters
Council approved the policy framework in 2008 and, in 2009, says it made sense to shelve the project.
Calgary identified its first PPP candidate. “With the city’s growth, we “We felt that as our first PPP we wanted to have a very strong
had a need for emergency response facilities,” Masters says. “The tra- value-for-money,” he says.
18 the municipalities december / january 2010 / 11
The fire hall project may still be resur- REGIna: WATCHING ANd WAITING
rected in an amended form. Meanwhile,
Calgary is moving ahead on three other
projects: a PPP for recreational facilities, a
maintenance station for its transit system and
a performing arts centre.
Only the PPP for recreational facilities
was “advanced” enough to submit to PPP
Canada for funding, Masters says. “But there
was an opportunity to get some useful feed-
back,” he adds, so Calgary submitted the
other two as well.
The logic behind the recreational fa-
cilities was the same as with the emergency
responses: the city had grown in size and
needed multiple buildings of the same type.
In this case, two large and two small multi-
purpose recreation centres equipped for
swimming, hockey, indoor soccer and the
like. REgIna, THE CaPITaL of Saskatchewan, is $6 billion of investment in today’s dollars, by
“It can take up to ten years to deliver just beginning its exploration of PPPs as a Environment Canada’s estimate, that must
each one of these and we needed four so, whole. Why now? It’s a mix of watching suc- now be financed by municipalities across the
again, we thought we had an ideal PPP can- cesses in other provinces, wanting to make country.
didate,” Masters says. the most out of every dollar and – last but not “I guess the challenge most municipali-
Pending approval from a newly elected least – the chance to have PPP Canada Fund ties have had is I think the federal govern-
city council, the project, budgeted at $300 foot some of the bill. ment underestimated the cost of their new
million in capital cost, could be opened up “To the extent there’s opportunities to regulatory standard,” Sjoberg says.
for bidding in 2011. apply to the federal government for funding Regina is also considering bundling to-
“We’re optimistic that we can move this and you have a better chance of being suc- gether various recreational facilities into a
forward,” Masters says. cessful with your application using a PPP ap- city-wide PPP contract for delivering them.
The maintenance station for the city’s proach … we need to learn those processes,” In April 2010, the city published a report,
bus fleet is a project that may go to RFQ in says Brent Sjoberg, general manager of cor- which concluded with recommendations for
2010 and could cost around $100 million. porate services for Regina. some 30 recreational facilities and improve-
“It’s something that’s identified as a need but Similar to Calgary, Regina is now ironing ments, ranging from dog parks to skateboard
not an immediate need,” he says. out its PPP policy, which Sjoberg hopes to facilities and an indoor water park. The total
Likewise, the renovation of Calgary’s have approved by city council prior to engag- was slightly less than $100 million, meaning
EPCOR Centre for the performing arts ing in his first project. that it could be the right size for a PPP con-
could top $100 million. “It was designed for At the top of his project list is a $140 tract. But the challenge, Sjoberg points out,
a city almost half the current size,” Masters million replacement to Regina’s wastewater is that “it’s not a standard set of assets”, like
says. The scope of the renovation is just be- treatment plant. Like many cities across Can- Ontario’s PPP for 18 police stations.
ing worked out and will be further refined ada, Regina needs to upgrade its wastewater The province of Saskatchewan has been
pending an expression of interest from the infrastructure to meet new rules passed by dealing with similar issues. It set up a PPP
industry. Environment Canada, the country’s regula- Secretariat in 2009, only to fold it in 2010
If all these opportunities materialise, they tory body for the environment, that improve because the volume of big projects needed
may well lay the tracks for Calgary’s biggest the quality of wastewater being discharged to interest the private sector wasn’t large
PPP opportunity: a 15-kilometre extension into the country’s rivers and streams. enough to merit having an independent
of the city’s light rail-transit system to serve “The bar is just being raised,” Sjoberg government body to administer it.
southeast Calgary. At a total cost of at least says. But, while Regina hasn’t “come to any
$1.5 billion, it would easily top the charts as But, as Environment Canada pointed conclusion yet” on its recreation facilities
the city’s largest and most complex PPP. out in its rules, published in March, “the PPP, he says the city will continue to explore
“I would say that realistically it’s sev- majority of the costs of the proposed regu- the possibility. And with it, learn about PPPs
eral years off,” Masters says. Nevertheless, lations would be borne by municipalities, as as a whole.
“we’re starting our discovery stage as a they own and operate the vast majority of “We need to be up to speed on those
PPP”, he adds. n wastewater systems in Canada”. That’s about things,” he says. n
intelligence report: canada ppp credit ratings 19
Rock solid
With very low credit risk and a strong capacity to pay back debts it’s unsurprising to find
that Alberta, British Columbia, Ontario and Québec’s strong credit ratings impact positively
on the projects they host
IT’s nO MEan feat to keep the public purse in order when governments The four provinces’ credit worthiness becomes especially important
all over the world are struggling to rein in their costs, but Canada’s considering that Canadian PPPs are backed by availability payments –
provinces can be pleased with a job well done. public sector contributions paid out (usually over a 30-year period) to
Throughout the financial crisis, the country’s 10 provinces have kept the private sector in exchange for their ability to maintain infrastruc-
their credit ratings parked at the highest echelons of the international ture assets in good condition.
credit agencies’ ratings system, holding fast to their reputation as very In this sense, their credit worthiness has a significant impact on the
low-to-low risk propositions with a strong capacity to repay debt. credit ratings of individual projects - their strength a key determinant
Alberta, British Columbia, Ontario and Québec – the core markets in attracting lender appetite at all stages of a deal’s lifecycle.
for public-private partnerships (PPPs) across Canada - are good
examples of this. Alberta’s finance ministry boasts of its “Triple-A” rating CLOsE RELaTIOn
on its website, noting that it “continues as the only province in Canada
with total financial assets that exceed total liabilities”. A look at the credit ratings of several Canadian projects reveals how
Moody’s, the ratings agency, also rates British Columbia as triple-A, closely related they are with the credit ratings of the provinces that
pointing out that it has managed to “reduce its debt burden to a level tender them. For almost all of these projects, Moody’s finds that a
that is below the median of Canadian provinces”. The province also downgrade of the grantor’s rating would trigger a downgrade to the
holds up well internationally, with Moody’s adding “British Columbia’s rating of an individual project.
debt burden is low when compared to its international peers, which Taking the Anthony Henday drive Southeast Leg Ring Road
include the German Länder and the Australian states”. PPP, in Edmonton, as an example, Moody’s highlights “the very high
Québec (Aa2) and Ontario (Aa1) are lower down the scale but still credit quality of the counterparty” (in this case, Aaa-rated Alberta)
within the range of “very low credit risk” investments “supported by high as one of the key agents behind the project’s A2 rating, a rating
debt affordability”. Their resilience is due in no small part to years of awarded to investments deemed of “low credit risk”.
revenue growth prior to the downturn, which has created good shock Moody’s confidence in Alberta’s credit worthiness is one of the
absorption capacity. So much so, in fact, that Moody’s does not forecast factors that help offset what it calls “the weakening credit quality” of
a change to the Canadian provinces’ ratings for 2010. one of the private sector participants in the project, “the low level of
Which is not to say they are invulnerable. Moody’s warns that debt service reserve fund equivalent to three months of debt service”
expensive stimulus efforts are putting pressure on the provinces’ debt and other factors weakening the project’s credit metrics.
affordability. This, combined with other possible scenarios such as That is to say, without the halo effect of the four provinces’ rock
double-dip recession or a failure to implement fiscal consolidation solid credit ratings, lender appetite for many of these projects could
measures, could prompt a downgrade. be significantly lower than it is today. n
Government Moody’s Long-term Debt Rating S&P Long-term Debt Rating
Government of Canada Aaa AAA
Alberta Aaa AAA
British Columbia Aaa AAA
Manitoba Aa1 AA
New Brunswick Aa2 AA-
Newfoundland Aa2 A
Nova Scotia Aa2 A+
Ontario Aa1 AA-
Prince edward Island Aa2 A
Québec Aa2 A+
Saskatchewan Aa1 AA+
Source: Bloomberg
20 canada ppp opportunities list december / january 2010 / 11
Projects centre stage
The following pages show projects currently in the pipeline across Canada’s provinces
Project Sector Province Status Govt Model Detail
level
Billy Bishop Transportation Ontario Request for Federal Design-build- The project is intended to improve
Toronto City qualifications finance-maintain- access to the Billy Bishop Toronto
airport proposed operate City airport by providing underground
pedestrian tunnel passage directly below the current ferry
project route connecting the main terminal of
the BBTCa to the existing mainland
ferry passenger transfer facility.
Brady Road landfill Environmental Manitoba Request for Municipal Design-build- Includes DBFO to collect and flare gas
gas & resource proposals finance-operate for a 20-year term as well as options
recovery project to recover gas as an energy source and
recover materials destined for landfill.
Chief Peguis Trail Transportation Manitoba Request for Municipal Design-build- 3.7km extension of the Chief Peguis
extension proposals finance-maintain Trail between Henderson Highway and
Lagimodiere Boulevard involving the
construction of a 4-lane divided new
roadway.
Energy services Environmental Ontario Request for Federal To be decided Options for outsorced development and
acquisition expressions of service provision of heating, cooling and
Program interest power distribution currently provided
by Public Works & government services
Canada. Will improve energy and
environmental efficiency of over 100
properties.
Evergreen Line Transportation British Request for Provincial, Design-build- The Evergreen Line is a new rapid
Rapid Transit Columbia qualifications territorial finance transit line that will connect Coquitlam
project to Vancouver via Port Moody and
Burnaby. It will be a fast, frequent and
convenient sky Train service.
Halton Healthcare Hospitals & Ontario Request for Provincial, Design-build- new replacement hospital to be located
services healthcare proposals territorial finance-maintain on Dundas street in Oakville, to provide
rehabilitation, renal dialysis, acute
inpatient care, inpatient and outpatient
mental health secondary and tertiary
level programs and a new cancer clinic.
intelligence report: canada ppp canada ppp opportunities list 21
Project Sector Province Status Govt Model Detail
level
Hotel Dieu Hospitals & Québec Request for Provincial, To be decided new facility and renovation of existing
Hospital, Québec healthcare expressions of territorial hospital facility in Québec City.
City interest
Humber River Hospitals & Ontario Request for Provincial, Design-build- new hospital with a capacity of 656
Regional Hospital healthcare proposals territorial finance-maintain beds as well as expanded emergency
services, increased specialised
outpatient services, modern diagnostic
equipment and updated infectious
disease containment systems.
Maritime Radio Communications Prince Request for Provincial, Design-build- new Brunswick, nova scotia and
Communications Edward proposals territorial finance-maintain- Prince Edward Island are looking for
system Island, nova own-operate a private provider to design, build,
scotia, new finance, maintain, own and operate
Brunswick an integrated public safety radio
communications system across the
Maritime region over an 18-year term.
Markham Hospitals & Ontario Request for Provincial, Build-finance new addition to the south and west of
stouffville Hospital healthcare proposals territorial the existing building and renovations
to vacated space: new emergency
department, expanded ambulatory
clinics, more inpatient beds and
operating rooms, a new diagnostic
imaging department, a new maternal
child area and a new mental health unit.
Mental Health Hospitals & Ontario Request for Provincial, Design-build- a new 350,000 sq ft state of the art
Centre, Penetang- healthcare proposals territorial finance, maintain mental healthcare facility that will
uishene provide a secure environment for
offenders with mental health disorders.
Moncton- Education new Request for Provincial, Design-build- The two new kindergarten to grade
Riverview schools Brunswick expressions of territorial finance-maintain 8 schools will be located in the
interest City of Moncton and the Town of
Riverview. The Riverview and Moncton
north schools will have areas of
approx 10,105 m2 and 10,604 m2
respectively.
Montreal Hospitals & Québec Request for Provincial, Design-build- Two-phase redevelopment project
university Hospital healthcare proposals territorial finance-maintain involving a 772-bed hospital centre
Center at the 1000 saint-Denis CHuM site,
including 39 operating rooms, an
emergency ward, ICu,birthing centre,
radiology, nuclear medicine, labs,
pharmacy, endoscopy and support
services.
22 canada ppp opportunities list december / january 2010 / 11
Projects centre stage (continued)
Project Sector Province Status Govt Model Detail
level
sheppard East Transportation Ontario Request for Municipal Design-build- a new maintenance and storage facility
Maintenance & proposals finance-maintain for new light rail vehicles that will
storage Facility operate on the sheppard East Light Rail
Transit and scarborough LRT projects
to be constructed on the corner of
sheppard avenue and Conlins Road in
scarborough.
sorel-Tracy Justice/ Québec Request for Provincial, Design-build- new Detention Centre with 300 beds
Detention Centre corrections qualifications territorial finance-maintain replacing the two current facilities in
Valleyfield and sorel-Tracy adding 149
beds to the existing capacity.
south West Justice/ Ontario Request for Provincial, Design-build- a new correctional facility in the
Detention Centre corrections proposals territorial finance-maintain Windsor area of south-western Ontario.
(Windsor) It will be maximum security and will
have capacity for 315 male and female
offenders and will include general
population, infirmary and segregation
beds.
st Joseph’s Hospitals & Ontario Request for Provincial, Design-build- Both regional mental health care
Regional Mental healthcare proposals territorial finance-maintain facilities will provide inpatient and
Health Care outpatient services to individuals
(London and st experiencing severe and persistent
Thomas) mental illness.
st Thomas Justice/ Ontario Request for Provincial, Design-build- new facility to be constructed on
Consolidated corrections proposals territorial finance-maintain the site of the historic Elgin County
Courthouse Courthouse, consolidating the Ontario
Court of Justice and superior Court of
Justice.
West Don Lands Recreation & Ontario Request for Municipal Design-build- Development of the section of the West
Pan/Parapan culture qualifications finance Don Lands that will be home to the
american athletes’ Toronto 2015 Pan/Parapan american
Village Project games athletes’ village. The project will
provide accommodation for athletes
and officials during the games.
Windsor-Essex Transportation Ontario Request for Provincial, Design-build- a new highway to connect Highway
Parkway proposals territorial finance-maintain 401 to a new international crossing
over the Detroit River to Interstate 75
in Michigan, usa. It will be a below
grade, six-lane highway, 11 kilometres
long with 11 tunnels and a four-lane
service road.
Source: The Canadian Council for Public-Private Partnerships’ Canadian PPP project database
intelligence report: canada ppp alberta schools case study 23
School’s in
Alberta’s innovative public-private partnerships to build 28 schools in edmonton and
Calgary saved taxpayers more than $200m and helped ease overcrowded classrooms
aLBERTa’s POPuLaTIOn sKyROCKETED during the 2000s. Fueled for money to be closer to $97 million.
by growth in the oil and gas sector, the province added more than Given the size of the project – the net present value of the PPP
600,000 new Albertans between 2000 and 2009, the most of any option stood at $634 million – every penny counted. So in 2007
decade since 1960. Alberta Infrastructure began a competitive
In Edmonton and Calgary, the PPP procurement for the 18 schools. Three
province’s two major cities, young families teams of bidders were shortlisted, one
began moving into new subdivisions on led by infrastructure developers Carillion
the outskirts of the city. With them came Canada and Acciona, another led by Plenary
the need for new infrastructure, including Education Canada and a third led by a
schools located closer to the cities’ growth Babcock & Brown-managed PPP investment
areas. fund now known as Amber Infrastructure.
“There was a lot of pressure from In July, Alberta chose the Babcock team
metro [school] boards to get more schools as its preferred bidder and reached financial
in the suburbs,” explains John Gibson, Alberta school: more needed due to rising close not a moment too soon on Friday, 12
project manager at Alberta Infrastructure. population September, 2008.
And there was the need to do so quickly: “We closed it 6pm on Friday and that
the traditional method of procuring schools, where a school board weekend Lehman Brothers collapsed,” recalls Gibson. “If we had been
would get a grant from the province’s Education Ministry and hire two more days we never would have put the deal together.”
architects, consultants and contractors under several contracts over
several years would simply not give Alberta its needed 18 schools fast a CHanGED MaRKEt
enough.
“We estimate that had we given six schools to Edmonton public Indeed, after the deal closed – with six banks providing $471 million of
school board to build themselves, they would have taken at least four long-term financing, according to lending database IIAssets – financial
years to get the six built,” Gibson says. conditions became so bad that Alberta had to scale back ambitions for
So in the mid-2000s, Alberta began considering the option of phase two of its schools project. The province wanted to tender another
building the schools under a PPP. The resulting Alberta Schools 14 schools under a similar PPP arrangement. But “we were getting ad-
Alternative Procurement, or ASAP, became Canada’s largest PPP for vice at the time, the fall of 2008, that we could have a difficulty getting
education infrastructure, accommodating 12,000 students. adequate financing because of the crisis,” Gibson recalls. “So we reduced
the size of the project and took out four high schools.”
SavInGS The four high schools proceeded as a design-build, and the ten
elementary and middle schools proceeded under a PPP. Earlier this
The key drivers behind the project were the cost savings and efficiencies year, a consortium led by German developer Hochtief PPP Solutions
that could be realised from bundling the schools together under one won the $253 million contract for the PPP, which is estimated to save
contract. Alberta taxpayers another $105 million.
“If you’re building 18 schools all at once, you can purchase 36 Thanks to the two PPPs, just as 18 new schools opened up in
boilers rather than two,” explains Gibson, who spearheaded ASAP Edmonton and Calgary to their first students in 2010, another ten were
for Alberta Infrastructure. And by leaving the maintenance of the already under construction, scheduled for completion in 2012. So the
building up to one private partner over the course of 30 years, there province will end up getting its schools faster and for less – with no
are additional efficiencies in the sourcing of labour and materials for difference in the quality of instruction.
repairs and upkeep. “We do not provide any education services at all. That’s in the
These cost savings can add up to a significant sum. Gibson’s hands of the school boards,” explains Stefan Parche, president of
ten-person project team estimated a value for money, or differential Amber Infrastructure’s North American operations. “So the actual
between the public procurement option and a PPP, of $50 million, user will not notice any difference between a PPP school and any other
expressed as a net present value. But even that was conservative. After school.”
studying the project, Alberta’s Auditor General determined the value “Both procurements were really, really successful,” Gibson says. n
24 ontario police case study december / january 2010 / 11
Regional partnership
for regional PPP
Ontario’s Provincial Police Modernisation province, we feel that’s one of the reasons why 27 months was the
shows how teaming up with local schedule [for this project].”
Regional representation also helped Hochtief win the project in
contractors and equity providers can be the first place – its second in North America, after the Alberta Schools
a good way to win a bundled PPP project PPP. Infrastructure Ontario rated regional representation very highly
because, in addition to the synergies from bringing local know-how to
spread across a wide footprint the project, “it’s also seen as a way for communities to have ownership
of development in their back yard,” Georgiou said. That leads to em-
OnTaRIO’s DOnE MORE PPP deals than any other province in ployment, industry growth and pride in the infrastructure that’s being
Canada, with more than 40 projects now under construction. But if developed across the province, he added.
one were to unbundle its latest deal, even that number would seem The project was also notable from a financial standpoint. After
small. the fallout from the financial crisis in 2008, “a lot of the international
In September, the province closed on a $548 million deal, to be banks decided to stop participating in the PPP market and in long-
paid over 30 years, to build 18 new facilities for the Ontario Provincial term financing solutions,” Georgiou said. Yet they squarely re-emerged
Police. Sprinkled throughout 16 municipalities in the province, the in this project: at financial close in September, three German banks –
facilities will replace old police buildings which have exceeded their KfW IPEX-Bank, WestLB and Nord/LB – provided $53 million in short
useful life with new state-of-the art regional headquarters, detachments term construction financing and $110 million in long term (30 year)
and forensic identification units better able to meet the needs of a financing for a total of $163
modern police force. million. It was the clearest return yet to the long-tenor, European bank-
“It’s really only the second bundled project that we have undertak- led financings that were much more prevalent in Ontario before the
en,” explained Vas Georgiou senior vice president of project delivery at crisis.
Infrastructure Ontario. The Ottawa Hospital Regional Cancer Program Hochtief and local partner Concert Real Estate Corporation pro-
was the first bundled project, which is now under construction and will vided $18 million of equity toward the project on a 50-50 basis. As with
be completed in early 2011. the local contracting partners, the participation of Concert, a Canadian
Bundling is not a priority for the province, Canada’s largest by property investor, also weighed positively for the Shield Infrastructure
population, since its projects typically are of large-enough size to at- Partnership.
tract private capital on their own. But in this case, the benefits were “The team was very representative of Ontario,” Georgiou said.
compelling.
“With 18 facilities to be constructed in 16 municipalities across unDER Way
the province, there is significant risk transfer,” Georgiou said. “There’s
everything from coordination, to the vast geography, dealing with local Construction on the 18 OPP facilities is now under way. Shield Infra-
trades [and] overseeing the maintenance of those 18 facilities once structure will receive a ‘substantial completion’ payment upon comple-
they’re operational.” tion of each site; Shield Infrastructure will receive also a ‘substantial
completion’ payment once all the facilities are complete in 2012. This
‘tREMEnDouS oPPoRtunIty’ combined amount of substantial completion payments translates to less
than 50 percent of the capital cost of the project. The province will pay
Adding it all up, Infrastructure Ontario saw “tremendous oppor- Shield Infrastructure an average of $14.9 million each year over the 30
tunity” to save taxpayers money, Georgiou said. A value for money year project term to maintain the facilities and to repay the remaining
analysis conducted by consultancy deloitte and Touche confirmed capital cost of the project. The annual payments are performance-
that the project generates savings to the province, though Infrastruc- based and Shield Infrastructure will be subject to penalties should it fail
ture Ontario could not yet release them publicly. to meet maintenance obligations over the life of the 30-year contract.
The savings were made possible because the winning propo- “By bundling together these 18 facilities we were able to come up
nent, Hochtief-backed Shield Infrastructure Partnership, included a with a template approach to serve the entire province,” Georgiou said.
diverse grouping of local contractors spread across the province. developers interested in similar opportunities shouldn’t be
“A typical project like this would probably be in the 36-month surprised if the project itself ends up being a template for future op-
schedule,” Georgiou said. “Because of their partners across the portunities. n
intelligence report: canada ppp montreal symphony orchestra case study 25
Hitting the right note
In 2009, Québec signed a first-of-its-kind public-private partnership contract that proves
music does not lie outside the bounds of alternative procurement
CaTCH a PERFORManCE of Beethoven’s 9th Symphony at despite the novelty, interest was strong: four groups of investors
Montreal’s Place des Arts and you might be a little bit underwhelmed bid for the project and by december 2007 three qualified teams
by what you hear. It’s not the performers – the Montreal Symphony were asked to submit detailed proposals.
Orchestra is a world-class symphony. But But in 2008 the financial crisis
Place des Arts, a multi-purpose facility intensified, toppling one of the
dating back to the 1960s, is not the ideal bidders, Australian investment bank
setting for a symphony. Babcock & Brown. “We definitely
“It’s not really dedicated to wanted to maintain three bidders,”
acoustic and symphonic music. So Benoit recalls, “so we were open to the
they’re currently performing in an substitution of Babcock & Brown with
environment that is not optimal for another equity partner.”
their needs,” says Pierre Benoit, project Babcock submitted fund manager
director at Infrastructure Québec. Meridiam Infrastructure as its
So the Québec Ministry of Culture replacement. After some negotiation,
and Communications, which places a Infrastructure Québec cleared
premium on promoting and expanding Montreal’s new concert hall (artist’s impression): Meridiam to participate and in March
private investor will receive revenue from events
the province’s musicians, decided it 2009 it received the three financial
needed to build a new, state-of-the-art proposals it had sought to preserve.
concert hall for the symphony. Groupe Immobilier Ovation, a team led
For investors more familiar with toll roads and power assets, a by Canadian developer SNC-Lavalin, emerged victorious and the
concert hall may not seem like infrastructure. But Infrastructure $105 million concert hall is now under construction.
Québec didn’t see it that way.
REVEnuE sHaRIng
CuLTuRaL assET
The Montreal Symphony Orchestra is scheduled to play its first per-
“For us it’s a cultural, public asset, so what’s the difference between formance at the new hall, named L’Adresse Symphonique (French
this and other infrastructure that is built for public benefit?” Benoit for “Symphonic Address”), in September 2011. At that time, a 27-
asks. “It’s certainly a different animal, but in terms of delivery we year maintenance and operation concession will begin, during
thought it was very relevant to consider the PPP mode.” which Groupe Immobilier will receive annual availability payments
So in 2006, Infrastructure from the Ministry of Culture and
Québec evaluated how much it Communication.
would cost the ministry to build “It’s certainly a different animal, but But that’s not all. Unlike
and maintain the concert hall
on its own, versus doing so with
in terms of delivery we thought it was many PPPs in Canada, L’Adresse
Symphonique will be a revenue-
the help of private investors. very relevant to consider the PPP mode” generating asset. Concert-goers
“We came to the conclusion will pay for tickets, cloak rooms
that we were better off with and refreshments. Putting the
the PPP because we expected some significant savings,” Benoit “partnership” in PPP, the public sector won’t keep all these earnings:
says. This was $48 million, to be exact, over the course of a two-year Groupe Immobilier will get to keep all the revenues from the bars
construction phase and 27-year maintenance period. and cloakrooms.
Convinced of the savings, Québec was ready to go to market. In They will also get additional payments for special events held
June 2006, Prime Minister of Québec Jean Charest unveiled a PPP for at the symphony, such as corporate gatherings. The more events,
the new concert hall, followed shortly by a request for qualifications to the more payments they receive: another reason why even though
design, build, finance, maintain and operate the new facility. It was a it was the fourth PPP procured by Québec, it will always be the first
first-of-its-kind procurement for the Canadian market. of its kind. n
26 south fraser case study december / january 2010 / 11
Full speed ahead
The $1.2bn South Fraser Perimeter project highlights how the public sector can,
quite literally, lay the groundwork for a successful public-private partnership
aT $75 BILLIOn of annual trade, Port Metro Vancouver is easily So the Ministry of Transportation split the project into two
Canada’s busiest port. But busy ports lead to busy roads and – phases. Phase one, which began in 2008, involved a lot of de-
without a strategy to deal with them risking activities like property
– congestion, pollution, lost time and acquisition and site preparation,
safety concerns. and phase two, which involves the
“In some cases, local road’s privately financed design
neighborhoods have container and construction.
trucks going on municipal streets, “We bought over 500 pieces
right through neighborhoods. of property at a cost of over
That’s the unacceptable situation,” $200 million,” Freer says. In
says Geoff Freer, project director 2008, once the route for the
at British Columbia’s Ministry of road was in place, the ministry
Transportation. started “pre-loading” the site with
So in 2003, the Ministry decided additional soil so that it could
to do something about this. Officials actually support a road. This
surveyed traffic patterns, consulted South Fraser Perimeter Road (artist’s impression): will link was necessary because the South
with local communities and crafted Vancouver ports with major highways Fraser Perimeter Road runs
an initiative known as the Gateway along Vancouver’s Fraser River,
Program. meaning that the soil nearby is moist and prone to settlement.
The Gateway Program seeks to get truck traffic off Vancouver’s The pre-loading cost another $100 million which, together with
streets and onto four new roads specifically designed for trucks: another $200 million of other preparatory costs, brought the
the South Fraser Perimeter Road, the North Fraser Perimeter phase one total to about $500 million.
Road, Port Mann Bridge and Pitt River Bridge.
PRICE saVIngs
unDERWay
While the province was doing the pre-loading, Partnerships BC was
The first of these projects – South Fraser Perimeter Road – is now busy procuring a private partner for phase two. By running the two
underway. The new 40-kilometre, four-lane road will link Vancou- activities side-by-side, “we saved a lot of time on schedule,” Freer
ver’s ports, rail yards and industrial areas to three major highways says. The province also saved on the price of the phase two con-
heading into Eastern Canada and the US. struction, which came in at $658 million.
“It’s a road designed for trucks,” says Freer, who manages the An ACS Infrastructure-led team, Fraser Transportation Group,
project for the Ministry. “Also, of course, commuters will use it.” won the bidding in May 2010 and reached financial close on the
But “the primary objective is for moving goods”. project three months later. Of the $658 million project cost, $200
With an overall project cost of $1.2 billion, it was clear the million will come from private sector financing. Another $363
South Fraser Perimeter Road was a candidate for PPP delivery: any million is coming from the federal government’s Asia-Pacific
project over $50 million undergoes a study to determine whether Gateway and Corridor Initiative, which dedicates money and
there is a compelling business case to get the private sector resources toward projects that improve mobility along important
involved. trade routes in Western Canada.
In 2004, the Ministry began discussions with Partnerships BC, Fraser Transportation Group is now building the road, Freer
the PPP delivery body. Soon it became clear it made sense to do says. Construction is slated to end in 2013, at which point Fraser
the project as a PPP. It was complex to design and build. Transportation will begin a 20-year operation contract for the road.
But it also would involve a lot of risks – such as land Bidders which missed out on South Fraser need not worry,
acquisition, right-of-way permitting, environmental mitigation though: there’s a companion North Fraser project in the works,
and site preparation – which private investors would be unlikely to which may also proceed as a PPP.
want to take up. “We’ll see that in the next couple of years,” Freer says. n
intelligence report: canada ppp ccppp q&a 27
Mind the municipalities
The Canadian Council for Public Private Partnerships’ Cynthia Robertson offers her views on
how the political landscape for PPPs has changed in Canada and why municipalities are poised
to pick up the torch from provincial governments in the future
aS CanaDa InCreaSeS its commitment support does vary a bit across the sectors.
to PPPs via the creation of the PPP Canada So if you start talking about water, and
Fund, there is much reason to believe that the wastewater, support is lower than for
Canada that will benefit from the fund will be roads and other infrastructure, like
much different from the Canada of the early bridges, hospitals and schools. And it
days of PPPs in the 1990s. differs across the country. But generally,
To point out the differences, and Canadians, whether you are in a [labour]
opportunities, Infrastructure Investor sought union household or not, whether you are
the views of Cynthia Robertson, interim in BC or Newfoundland and Labrador,
executive director of The Canadian Council you support PPPs because all Canadians
for Public Private Partnerships and formerly recognise that our infrastructure needs
a senior executive with the government of improvement.
Nova Scotia.
WHaT aBOuT THE POLITICs OF PPP?
HOW DID yOu gET InVOLVED In PPPs? CR: I worked for a Liberal Government
CR: I was moved into a newly formed robertson: availability payments a valid option in Nova Scotia that was very pro-PPP.
department called Business and The current BC Liberal Party began
Consumer Services in Nova Scotia. And the country’s first major PPP program.
I was in charge of eight different sections The Ontario Liberal Government is
from different ministries across the generally pragmatic. Most understand in the midst of the country’s largest
government, which were moved into that our governments are facing some real PPP program known as Alternative
one new organisation and I was given fiscal challenges and that we can’t keep Finance and Procurement. PPP in New
the responsibility for integrating all of spending the way we have or providing Brunswick has weathered a change in
those different divisions. One of my infrastructure and services the way we government. The federal Conservative
responsibilities was a PPP – this was in always have. Provided the government Party is a very strong supporter of PPP.
1997 – and it was called the Nova Scotia service is delivered as they expect, I don’t So where you would think that mainly
Business Registry – and it was being built think most people care who actually a Conservative Government would
as a PPP. I didn’t know anything about it. maintains the road or building. There has support the continuation of a PPP type
And at that stage The Canadian Council been some opposition to PPP from the of infrastructure development, it doesn’t
[for PPPs] had formed in 1993, it was public service unions in Canada, but we always happen that way. So sometimes
a very small group of people. So when have found that over the last couple of it’s just that PPPs are seen as being a
I found out about the council, it was years that they don’t get much traction. smarter way to develop much-needed
four years old and I joined immediately I think at this point, most people don’t infrastructure and ideology doesn’t factor
because I knew that I needed to find believe it, because they go to the new into it. But I think most politicians also
context and information about how to do hospital or they drive on the great new don’t believe that PPP is the answer to
a PPP successfully. road or they see the functioning water everything – they realise that they only
treatment plant. work for certain types of projects and in
WHaT aBOuT CanaDa MORE BROaDLy certain circumstances.
– WHy HaVE CanaDIans EMBRaCED sO WHERE DOEs CanaDIan PuBLIC
PPPs? OPInIOn sTanD TODay On PPPs? DOEs POLITICs OFTEn DERaIL PPPs In
CR: While Canadians have some strong CR: Canadians across the country CanaDa?
beliefs when it comes to government overwhelmingly are in support of PPPs, CR: No, not anymore. There have been
services like healthcare, I think they are with 65 percent supporting them. But some volatile debates at the municipal
28 ccppp q&a december / january 2010 / 11
level on issues like water PPPs. Along BuT WOuLD THEy BE aBLE TO aFFORD the project gets off the ground and moves
with medicare, Canadians seem to have THEsE PayMEnTs ahead. And especially at the municipal
a very strong affinity for “public” water/ CR: In many cases yes, because the payments level, those governments often need some
wastewater systems. And the opposition are amortised over many years, just like a help in getting the PPP model going. And
to these projects, often coordinated home mortgage. the more projects that get started, the
by public sector unions, plays on those more experience they will get, and more
feelings. But there are terrific examples of LasT yEaR, WHEn WInnIPEg unVEILED a confidence in the PPP model will result.
successful PPP water/wastewater projects $7.4Bn InFRasTRuCTuRE DEFICIT, OnE OF And all of it has to be proven with a business
in places like Brockton (formerly known THE CITy COunCILORs saID ‘EVEn IF WE case. So if the project doesn’t make sense,
as Walkerton), where an awful tragedy ExPanD OuR PPP PORTFOLIO, WE sTILL then the PPP model won’t be used.
occurred with tainted drinking water HaVE TO FInanCE THE LEasE PayMEnTs
provided through a public entity. So we’re On THaT PORTFOLIO’. sO Isn’T THERE OnE OF THE InTEREsTIng
seeing fewer debates where ideology a LIMIT TO HOW Many aVaILaBILITy DEVELOPMEnTs WITH THE PPP CanaDa
trumps reason, and more cases where PayMEnT-BasED PPPs Can BE DOnE FunD Is THE InTEREsT MunICIPaLITIEs
political leaders just want to get better WITHOuT nEW REVEnuEs? as WELL as naTIVE CanaDIan ‘FIRsT
value for taxpayer dollars. CR: Absolutely, and that’s true of naTIOn’ COMMunITIEs aRE sHOWIng
“traditionally financed” infrastructure as In ITs uTILIsaTIOn. DO yOu THInK THIs
WHERE DO yOu sEE MORE well. I’m not saying that PPP is new money. Is an EMERgIng OPPORTunITy FOR
OPPORTunITIEs FOR PPPs In CanaDa? That’s a misconception that some have, that PPPs?
CR: I think we’ll see a lot more [activity] at the PPP model somehow creates a payment CR: Municipalities and First Nations, yes,
the municipal level. Municipal infrastructure stream out of nowhere. If you need the that’s absolutely an emerging opportunity.
in Canada is really crumbling and at to point infrastructure, if you don’t have the capital, It’s something that is of great interest to
a lot of municipalities –a few have, City of you don’t have the borrowing power to me. We have to do something differently
Winnipeg has done a few projects –have not go out and borrow to build it yourself, it’s in Canada in terms of our Indian reserves.
done as many. I would say it’s because many either pay me now or pay me later, right? A We have a similar problem that you do in
of the cities of Canada have seen projects city has to be able to deliver services, period. the US, you call them reservations. The
at $500 million and above and a lot of the So whether you borrow it to build it yourself reserves that are adjacent to major civic
cities have said, ‘those projects are too big or whether you engage a private partner centers tend to do a little bit better than
for us’. But I think you’ll see more and more. and pay for it out of a stream of availability those that are more remote, obviously. But
You’ll see more in light rail and in public payments, you still have to pay for it. But what are we going to do in terms of land
transport, subway systems and those sorts of value for money and lifecycle maintenance claim and development and development
bigger projects. I think you’ll start to see a lot are key factors that should be considered of infrastructure in First Nations? It’s
more in water, wastewater, because municipal in the affordability equation. If the project a huge challenge and it’s something I
infrastructure is in bad shape in Canada. can be delivered on time, on budget think that we need to discuss in broader
And there are some good examples of small and significantly reduce the long-term terms. We need to look at new methods of
projects that have worked really well. maintenance costs, then the government helping these communities with economic
will definitely save money in the long term. development, education and even basic
BuT WILL THE MunICIPaLITIEs HaVE THE Looking at the interest costs alone isn’t services like clean water and modern
MOnEy TO FIx IT? enough, you have to evaluate the significant healthcare facilities. I think PPP can play a
CR: Well, those big municipal projects benefits of transferring risks to the private role in that.
are often funded under tri-partite sector.
agreements with provincial governments sO THE COnVERsaTIOn Is JusT gETTIng
and federal government as well, for major In THaT REgaRD, HOW HELPFuL TO sTaRTED?
infrastructure projects. So they don’t MunICIPaLITIEs Is THE PPP CanaDa CR: Yes. n
have to undertake the capital investment FunD?
themselves. But that’s where a PPP makes CR: The PPP Canada Fund is really not
a lot of sense for a municipality. Because meant to be ‘the fund’ to support all of Cynthia Robertson is Executive Director of
they don’t have the capital to undertake a these projects. From my perspective, the The Canadian Council for Public-Private
big infrastructure project and pay for it all fund is really a gap lender. I don’t think Partnerships. Previously, she was Principal
at once, why not go into a partnership and the federal government’s plan is to be with Parkridge Properties Inc, a consultancy
pay for it over many years using availability an equity player. But they can provide a specialising in PPP advisory, organisational
or service payments? reasonable amount of funding to make sure change and real estate development.
intelligence report: canada ppp financing 29
Bright, and getting brighter
New sources of equity, a strengthening bond market and a bedrock of provincial support
have made Canada a ‘bright spot in the global PPP market’, say equity investors, underwriters
and advisors active in the market
as COMPLICaTED as PPPs may be to industrial players in the Canadian market,
put together – talk to a PPP deal lawyer due to their slower domestic activity, than
or banker and you’ll often hear tales of a just the pure financials that existed just
foot of documentation, if not more – the five years ago,” he says.
recipe for their success is not nearly as For firms like Meridiam – a financial
complicated. It’s one (big) part political player focused on the PPP market for new-
support, one part availability of debt, plus construction PPP projects – this is both a
a steady choice of deals and partners with blessing and a challenge. “There’s more
whom to pursue them. people to partner with. There’s also more
Over the past two years, European competition,” Boucher says.
countries reassessed their PPP But the growth hasn’t all been on
programmes amid belt-tightening. The US the side of industrial developers. Indeed,
market gave birth to scarce successes amid one of Meridiam’s newest partners is a
a minefield of broken deals. Meanwhile, Canada-focused fund manager – Fiera
Canada continued to deliver all the Axium Infrastructure – with whom the
required ingredients and more for what firm closed on the $470 million Montreal
PPP advisors, lenders and equity investors University Hospital Research Centre
Hann: when Canada starts a PPP,
see as one of the most vibrant markets for it normally finishes project in May. Fiera Axium believes the
PPPs in the world. Canadian PPP market is deep enough
“Canada is really a very bright spot Babcock & Brown “were the main players and attractive enough that it can be used
in the global PPP market,” says Nicholas you would see more often than not in the to anchor a base of institutional investors
Hann, executive director at Macquarie Canadian marketplace,” he adds, pointing around a fund that dedicates its capital
Capital Markets Canada in Vancouver. “As out that he worked at two of them – ABN to Canada and in particular PPPs. The
a result, every major global PPP player … Amro and Babcock & Brown – before firm is targeting $400 million in total
has a presence in Canada.” settling into his current position at commitments to the fund.
Meridiam near the end of 2008. “We believe the Canadian market
nEW EQuIty The credit crisis disrupted this order is the most sophisticated toward
as well as re-priced risk capital. ABN Amro infrastructure,” says Bruno Candes, vice
Of course, that didn’t happen overnight. exited the market and was sold to RBS, president and senior investment director
Paul Boucher, senior investment director Santander and Fortis (Forits) and Babcock at Fiera Axium in Toronto. And it’s no
at fund manager Meridiam Infrastructure, & Brown went into administration, longer just the big guns of the Canadian
has spent much of the last decade bidding opening up opportunities for others to institutional world, like the $129.7 billion
on some of Canada’s highest-profile PPPs, enter the market. Canada Pension Plan Investment Board.
like British Columbia’s Sea-to-Sky Highway “What we’re seeing now are players Increasingly, he’s noticing appetite for
and Ontario’s durham Consolidated who have replaced the guys who were in infrastructure among the country’s smaller
Courthouse. He remembers a much the top three spots such as, Meridiam and pension plans – those with under $5
different industry back in the early 2000s. large industrials that fund the projects billion in investable assets – both for PPP
“Initially, the market in Canada was, themselves,” Boucher says. These large equity and debt.
on the equity side, supported mainly by industrials include Hochtief, Bouygues, For example, on the aforementioned
the large, international fund managers Bilfinger, Acciona, ACS, Cintra, Carillion Montreal University Hospital Research
that had a PPP slant to them,” he says. and, most recently, Balfour Beatty. Centre project, Fiera Axium and
Names like Macquarie, ABN Amro and “So there’s a lot more international Meridiam sold $400 million of A-rated
30 financing december / january 2010 / 11
bonds to a mix of pension funds as well as This is not to say that bank loans are authorities got right.
the more traditional life insurance plans: a out of the question. Both Scotia’s Clark First, they’re very simply finishing what
sign that the institutional market has been and Td’s Wolff say they still have to put up they start. That may seem like an unusual
sufficiently “educated” about the asset a competitive bond solution that can go qualifier, but compared to the US, where
class to demand significant PPP exposure, toe-to-toe against a bank loan in any given political uncertainty has torpedoed many
Candes says. deal. a PPP (three in Pennsylvania alone), it’s
“We compete with a bank solution, certainly a distinction worth making.
BanKInG on GRoWtH often with a European bank solution that “Canada has extremely consistent deal
will go as long as 20 to 25 years,” Wolff says. flow and it has extremely good process,”
In the banking world, growing And, interestingly, just as European banks says Macquarie’s Hann. “Once a PPP
institutional demand for PPP exposure has – which largely fled the market in the wake process has started in Canada, it is very
given rise to new business opportunities at of the financial crisis – are coming back unusual for a process not to proceed to
a rapidly expanding pace. Bert Clark, head to Canada, Canadian dealers are looking successful close.”
of infrastructure advisory at Scotia Capital to the bond market. Aside from Scotia This doesn’t mean that all deals
for Canada and the US, believes Canada’s and Td, several other home-grown banks, necessarily reach financial close. The
debt capital markets can now easily including the Royal Bank of Canada, CIBC Canadian market has had some high-
support up to $1 billion in a distributed and BMO have been increasingly active in profile deals fall apart, like the $2.3 billion
bond issue. capital markets for PPPs. Port Mann Bridge project in British
One key data point giving Clark And as long as the market keeps Columbia. In that case, the Macquarie-
confidence: a $764 million issue of becoming more liquid, spreads will led winning proponent couldn’t come
senior secured bonds for Québec’s continue to tighten, making the bond to terms with the province on a mutually
McGill University Health Centre PPP in option more competitive. At some agreeable financing agreement. So in early
Montreal, for which Scotia acted as bond point, that could put PPP issuers more 2009 British Columbia scrapped the PPP
underwriter and mandated lead arranger. on par with large public infrastructure and pursued the project as traditional
At final count, there were more than 50 issuers, like the Greater Toronto Airports design-build. Both Macquarie’s Hann and
buyers for the issue. Authority (GTAA). But not just yet: Wolff Partnerships BC’s Sarah Clark ascribed
“It was the biggest PPP bond deal observes that in the current market, a the deal’s failure to poor timing, given
in Canada to date,” Clark says. “I think buyer of a long GTAA issue could expect the market turmoil that followed its award
18 months ago people would have been a spread of somewhere around 140 basis during summer 2008.
suspicious of whether you could realise points over the equivalent Canadian But Canadian provinces certainly
that much money in the bond market.” government bond, versus 260 basis points learned from the Port Mann experience.
Michael Wolff, head of infrastructure for, say a hospital PPP bond. Among the meaningful changes
and private placements for Td Securities “If you’re a money manager, you’re introduced in 2009, most notably in British
in Toronto, credits the strong market to an looking at the relative value between those Columbia, was greater provincial support
entry of new investors for PPP bond issues, two types of investments,” says Wolff, and, in the form of payments toward projects
which he terms “public-style buyers”. with a 120 basis point difference, the while they’re in construction. These so-
“One of the things they look for is choice right now seems pretty clear. called “milestone” payments lower the
liquidity in what they’re buying,” Wolff Agrees Scotia’s Clark: “These are amount of private financing needed for
says. And with 50-plus investors for deals high-quality investments where you’re a project, therefore making them more
like McGill University Health Centre, earning hundreds of basis points over the economical.
there’s plenty of such “public-style buyers” equivalent Government of Canada yield And once transactions close, investors
which can facilitate liquidity. These and the ultimate payor for these projects is know they’re locked into an agreement
include money managers like Feira, Canso a provincial or federal government.” with highly creditworthy counterparties.
and Addenda, just to name a few. All of Canada’s provinces have credit
Contrast that with the traditional PRovInCIaL PRovEnanCE ratings comfortably in the investment
buyers of PPP bonds – Canadian life grade range, meaning that “there is no
insurers like Canada Life, Manulife and All of which, of course, indicates that appropriation risk per se in Canada”,
Sun Life which typically act as buy-and- Canada’s governments must be doing Hann says, referring to the risk that a
hold investors – and it becomes clear that something right to be stimulating such government counterparty won’t make
Canada’s PPP bond market has become a growing market. Indeed, PPP advisors good on a promised payment.
much broader and more liquid than two surveyed by Infrastructure Investor could “And that’s a big difference between
years before. point to more than a few things provincial Canada and the US,” he adds. n
intelligence report: canada ppp providers of debt 31
SELECtED LoanS to CanaDIan PPP PRoJECtS: 2006 to DatE
Project Name Tranche Tranche Financial Underwriting Issue Date Maturity Tenor Mandated Lead Arranger
Currency Amount Instrument Type Date
Alberta Schools CAd 211.0 Term Loan Bilateral 10/09/2008 10/06/2039 30 Years Bank of Ireland, Bank of Montreal (BMO), CIT
(Phase I) 4 Months Group Inc, National Australia Bank (NAB),
Sumitomo Mitsui Banking Corp (SMBC),
Toronto-dominion Bank
Alberta Schools CAd 125.0 Term Loan Syndicated 10/09/2008 10/07/2010 1 Years 3 Bank of Ireland, Bank of Montreal (BMO), CIT
(Phase I) Months Group Inc, National Australia Bank (NAB),
Sumitomo Mitsui Banking Corp (SMBC),
Toronto-dominion Bank
Alberta Schools CAd 135.0 Term Loan Syndicated 10/09/2008 10/06/2039 30 Years Bank of Ireland, Bank of Montreal (BMO), CIT
(Phase I) 4 Months Group Inc, Sumitomo Mitsui Banking Corp
(SMBC), Toronto-dominion Bank
Alberta Schools CAd 17.3 Term Loan Club 15/04/2010 15/07/2012 2 Years 3 Bank of Ireland (Connecticut Branch),
(Phase II) Months Sumitomo Mitsui Banking Corp (SMBC)
Alberta Schools CAd 74.8 Term Loan Club 15/04/2010 15/04/2030 20 Years Bank of Ireland (Connecticut Branch),
(Phase II) 0 Months Sumitomo Mitsui Banking Corp (SMBC)
Ashlu Creek Power CAd 109.0 Construction Syndicated 13/09/2007 13/03/2010 2 Years 7 Royal Bank of Canada (RBC)
Project Loan Months
Ashlu Creek Power CAd 3.0 Letter of Syndicated 13/09/2007 13/09/2022 15 Years Royal Bank of Canada (RBC)
Project Credit 0 Months
Autoroute 30 CAd 290.0 Construction Syndicated 29/09/2008 29/03/2014 5 Years 7 Banco Bilbao Vizcaya Argentaria (BBVA),
Loan Months Banco Espanol de Credito SA (BANESTO),
Banco Espirito Santo de Investimento (BES
Brasil), Banco Popular Espanol, Bank of
Scotland, Caja de Ahorros Y Monte de Piedad
de Madrid, Caja de Ahorros Y Pensiones de
Barcelona (La Caixa), deka Bank, HVB Bank,
Instituto de Credito Oficial (ICO), Royal
Bank of Canada (RBC), Scotia Capital, Societe
Generale
Autoroute 30 CAd 804.4 Term Loan Syndicated 29/09/2008 29/09/2038 30 Years Banco Popular Espanol, Bank of Scotland,
0 Months deka Bank, HVB Bank, Societe Generale
Boralex Wind CAd 57.0 Term Loan NA 08/09/2009 04/09/2014 5 Years 0 BNP Paribas
Farms Months
Boralex Wind CAd 5.0 Letter of NA 08/09/2009 04/09/2014 5 Years 0 BNP Paribas
Farms Credit Months
Centre for CAd 115.0 Term Loan Syndicated 16/12/2009 16/05/2012 2 Years 8 Banco Espirito Santo de Investimento (BESI),
Additction and Months dexia Group, Scotiabank
Mental Health
Project
Comber Wind Farm CAd 354.0 Construction Club 12/10/2010 12/10/2013 3 Years 0 Bank of Tokyo-Mitsubishi UFJ Ltd, Canadian
Loan Months Imperial Bank of Commerce (CIBC), Mizuho,
National Bank Financial (NBF), Scotiabank,
Sumitomo Mitsui Banking Corp (Canada
branch)
CRCHUM Montreal CAd 21.3 Mezzanine Bilateral 26/05/2010 26/10/2013 3 Years 5 RBC dominion Securities
University Hospital Loan Months
Research Centre
PPP
Glen dhu Wind CAd 107.0 Construction Club 14/10/2010 14/10/2028 18 Years Banco Bilbao Vizcaya Argentaria (BBVA),
Project Loan 0 Months Instituto de Credito Oficial (ICO)
Glen dhu Wind CAd 1.6 Letter of Club 14/10/2010 14/10/2017 7 Years 0 Banco Bilbao Vizcaya Argentaria (BBVA),
Project Credit Months Instituto de Credito Oficial (ICO)
Glen dhu Wind CAd 6.0 NA Club 14/10/2010 14/10/2017 7 Years 0 Banco Bilbao Vizcaya Argentaria (BBVA),
Project Months Instituto de Credito Oficial (ICO)
Golden Ears Bridge CAd 928.0 Term Loan NA 03/03/2006 03/09/2040 34 Years depfa Bank, dexia Group
Project 6 Months
Golden Ears Bridge CAd 25.0 Credit NA 03/03/2006 03/09/2040 34 Years depfa Bank, dexia Group
Project Facility 6 Months
Golden Ears Bridge CAd 10.0 Credit NA 03/03/2006 03/09/2040 34 Years depfa Bank, dexia Group
Project Facility 6 Months
Goreway Plant CAd 867.7 Construction NA 12/04/2006 14/07/2014 8 Years 3 ABN AMRO, BNP Paribas, Royal Bank of
Loan Months Canada Capital Markets (RBCCM), Scotia
Capital, Toronto-dominion Bank
32 providers of debt december / january 2010 / 11
Project Name Tranche Tranche Financial Underwriting Issue Date Maturity Tenor Mandated Lead Arranger
Currency Amount Instrument Type Date
Helios Solar Project CAd 96.2 Construction Club 23/06/2010 23/03/2016 5 Years 4 Caixanova, dexia Group, WestLB
Loan Months
Helios Solar Project CAd 96.2 Term Loan Club 23/06/2010 23/03/2016 5 Years 4 Caixanova, dexia Group, WestLB
Months
Kruger Energy CAd 196.2 Term Loan Syndicated 23/04/2010 31/05/2013 3 Years 1 Canadian Imperial Bank of Commerce (CIBC),
Chatham Wind Months deutsche Bank, Rabobank, Scotiabank,
Sumitomo Mitsui Banking Corp (SMBC)
Kruger Energy CAd 16.3 Standby Syndicated 23/04/2010 31/05/2013 3 Years 1 Canadian Imperial Bank of Commerce (CIBC),
Chatham Wind Facility Months deutsche Bank, Rabobank, Scotiabank,
Sumitomo Mitsui Banking Corp (SMBC)
Montreal Gateway CAd 306.0 Term B Loan Syndicated 10/05/2007 10/05/2017 10 Years Caja de Ahorros Y Monte de Piedad de
Terminals 0 Months Madrid
Montreal Gateway CAd 35.0 Capex Syndicated 10/05/2007 10/05/2017 10 Years Caja de Ahorros Y Monte de Piedad de
Terminals Facility 0 Months Madrid
Montreal Gateway CAd 18.0 Revolving Syndicated 10/05/2007 10/05/2017 10 Years Caja de Ahorros Y Monte de Piedad de
Terminals Credit 0 Months Madrid
MUHC McGill CAd 393.0 Construction Club 08/07/2010 08/07/2014 4 Years 0 BNP Paribas, Canadian Imperial Bank of
University Health Loan Months Commerce (CIBC), Credit Agricole CIB, dexia
Centre PPP (New York Branch), Royal Bank of Scotland
(RBS), Scotiabank, Sumitomo Mitsui Banking
Corp (SMBC)
Niagara Health CAd 155.0 Construction Syndicated 27/03/2009 26/03/2012 3 Years 0 BMO Capital Markets, Societe Generale,
Complex PPP Loan Months Toronto-dominion Bank
North Battleford CAd 542.0 Term Loan Syndicated 30/08/2010 30/08/2020 10 Years Bank of Montreal (BMO), Canadian Imperial
Power Project 0 Months Bank of Commerce (CIBC), Union Bank NA
North Battleford CAd 38.0 Letter of Syndicated 30/08/2010 30/08/2014 4 Years 0 Bank of Montreal (BMO), Canadian Imperial
Power Project Credit Months Bank of Commerce (CIBC), Union Bank NA
Nova Scotia Gas USd 350.0 Credit Syndicated 18/06/2009 18/09/2017 8 Years 3 Bank of Tokyo-Mitsubishi UFJ Ltd, Export
Field Facility Months development Canada (EdC), ING Group,
NIBC Bank
Ontario IPP Project CAd 473.0 Construction Syndicated 31/05/2007 31/05/2007 0 Years 0 Bank of Tokyo-Mitsubishi UFJ Ltd, BayernLB,
Loan Months BMO Capital Markets, HSH Nordbank,
Landesbank Hessen-Thuringen (Helaba),
Sumitomo Mitsui Banking Corp (SMBC)
Ontario IPP Project CAd 80.0 Construction Syndicated 31/05/2007 31/05/2025 18 Years Bank of Tokyo-Mitsubishi UFJ Ltd, BMO
Loan 0 Months Capital Markets, HSH Nordbank, Landesbank
Hessen-Thuringen (Helaba)
Ontario IPP Project CAd 50.3 Letter of Syndicated 31/05/2007 31/05/2012 5 Years 0 Bank of Tokyo-Mitsubishi UFJ Ltd, BayernLB,
Credit Months BMO Capital Markets, HSH Nordbank,
Landesbank Hessen-Thuringen (Helaba)
Ontario IPP Project CAd 45.0 Revolving Syndicated 31/05/2007 31/05/2012 5 Years 0 Bank of Tokyo-Mitsubishi UFJ Ltd, BayernLB,
Credit Months BMO Capital Markets, HSH Nordbank,
Landesbank Hessen-Thuringen (Helaba)
Ontario Provincial CAd 109.5 Term Loan Club 14/09/2010 14/03/2040 29 Years KfW IPEX-Bank, Norddeutsche Landesbank
Police PPP 7 Months (NordLB), WestLB
Ontario Provincial CAd 53.2 Construction Club 14/09/2010 14/03/2013 2 Years 7 KfW IPEX-Bank, Norddeutsche Landesbank
Police PPP Loan Months (NordLB), WestLB
Route 1 Gateway CAd 445.6 Construction Syndicated 31/03/2010 31/03/2013 3 Years 0 Banco Espirito Santo SA (BES), Bank of
Project Loan Months Montreal (BMO), Canadian Imperial Bank
of Commerce (CIBC), Export development
Canada (EdC), National Bank of Canada
Royal Victoria CAd 221.6 Construction Syndicated 01/02/2009 01/04/2013 4 Years 2 Banco Espirito Santo de Investimento (BESI),
Hospital Loan Months National Australia Bank (NAB), Norddeutsche
Landesbank (NordLB)
Saint John LNG USd 756.0 Term Loan NA 20/11/2006 20/11/2033 27 Years Banco Bilbao Vizcaya Argentaria (BBVA), Bank
Terminal 0 Months of Montreal (BMO), Grupo Santander, La
Caixa, Royal Bank of Scotland (RBS)
South Fraser USd 170.0 Term Loan NA 15/07/2010 15/07/2032 22 Years Credit Agricole CIB, Grupo Santander, ING
Perimeter Road 0 Months Group, Societe Generale, Unicredit SpA
St Clair Energy CAd 95.9 Letter of Syndicated 03/09/2007 03/09/2012 5 Years 0 GE Capital Markets Inc, Landesbank Hessen-
Centre Credit Months Thuringen (Helaba), Natixis, Royal Bank of
Canada (RBC), Union Bank NA
St Clair Energy CAd 382.9 Term Loan Syndicated 03/09/2007 03/09/2012 5 Years 0 GE Capital Markets Inc, Landesbank Hessen-
Centre Months Thuringen (Helaba), Natixis, Royal Bank of
Canada (RBC)
Source: Infrastructure Investor assets (www.iiassets.com)
CanaDa: KEy EConoMIC InDICatoRS
2009:1 2009:2 2009:3 2009:4 2010:1 2010:2 2010:3 2010:4 2011:1 2011:2 2011:3 2011:4 2009 2010 2011
GDP at market prices (2002 $ billions) 1,287.2 1,278.0 1,280.9 1,296.4 1,314.9 1,321.4 1,324.6 1,337.4 1,345.3 1,354.2 1,362.3 1,371.5 1,285.6 1,324.6 1,358.3
–1.8 –0.7 0.2 1.2 1.4 0.5 0.2 1.0 0.6 0.7 0.6 0.7 –2.5 3.0 2.5
Implicit price deflator— 1.177 1.180 1.191 1.204 1.215 1.218 1.231 1.238 1.246 1.250 1.257 1.265 1.188 1.225 1.255
GDP at market prices (2002 = 1.0) –1.6 0.2 0.9 1.2 0.9 0.2 1.0 0.6 0.7 0.3 0.6 0.6 –2.1 3.1 2.4
u.S. GDP at market prices (2005 $ billions) 12,833 12,810 12,861 13,019 13,139 13,192 13,250 13,314 13,416 13,541 13,677 13,818 12,881 13,224 13,613
–1.2 –0.2 0.4 1.2 0.9 0.4 0.4 0.5 0.8 0.9 1.0 1.0 –2.6 2.7 2.9
intelligence report: canada ppp
Consumer Price Index (2002 = 1.0) 1.136 1.146 1.147 1.149 1.154 1.162 1.168 1.175 1.182 1.189 1.196 1.202 1.144 1.165 1.192
–0.3 0.9 0.1 0.1 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.3 1.8 2.3
total employment (000s) 16,871 16,826 16,823 16,876 16,944 17,119 17,217 17,278 17,382 17,480 17,580 17,700 16,849 17,140 17,535
unemployment rate 7.8 8.4 8.5 8.4 8.2 8.0 8.0 8.0 7.8 7.6 7.3 7.0 8.3 8.1 7.4
Private non-farm average hourly earnings 22.87 23.01 22.88 22.97 23.01 23.02 23.08 23.20 23.32 23.45 23.61 23.77 22.93 23.08 23.54
2.0 0.6 –0.6 0.4 0.2 0.0 0.3 0.5 0.5 0.6 0.7 0.7 4.5 0.6 2.0
Disposable Income (2002 $ billions) 870.6 875.4 876.9 877.0 880.9 914.4 898.5 902.6 905.6 909.6 916.5 922.0 875.0 899.1 913.4
0.0 0.6 0.2 0.0 0.4 3.8 –1.7 0.5 0.3 0.4 0.8 0.6 1.2 2.8 1.6
Private non-farm productivity 44.63 44.73 44.53 45.01 45.60 45.22 45.18 45.22 45.10 45.11 45.15 45.14 44.72 45.30 45.13
(2002 $ thousands) 0.8 0.2 –0.4 1.1 1.3 –0.8 –0.1 0.1 –0.3 0.0 0.1 –0.0 0.5 1.3 –0.4
federal government balance ($ millions) –36,044 –46,016 –40,172 –37,500 –23,940 –38,704 –33,251 –30,263 –27,253 –23,070 –18,426 –13,400 –39,933 –31,540 –20,537
Corporate profits before taxes ($ billions) 147.8 134.0 146.9 158.9 172.6 170.8 167.3 173.5 174.3 170.7 170.6 170.5 146.9 171.1 171.5
–18.3 –9.3 9.6 8.2 8.6 –1.0 –2.1 3.8 0.5 –2.1 –0.1 –0.0 –32.3 16.4 0.3
Housing starts (000s units) 132 130 156 179 193 202 190 180 175 174 175 178 149 191 1 76
Prime rate 2.83 2.25 2.25 2.25 2.25 2.33 2.54 2.75 3.04 3.54 4.04 4.54 2.40 2.47 3.79
Cdn. 3-Month treasury bill rate 0.71 0.23 0.23 0.22 0.21 0.47 0.75 0.92 1.20 1.68 2.16 2.65 0.35 0.59 1.92
u.S. 3-Month treasury bill rate 0.22 0.17 0.16 0.06 0.11 0.15 0.14 0.10 0.07 0.04 0.05 0.34 0.15 0.12 0.12
Exchange rate (C$/US$) 0.803 0.857 0.911 0.947 0.961 0.973 0.961 0.966 0.972 0.994 1.000 1.002 0.879 0.965 0.992
u.S. federal funds rate 0.18 0.18 0.16 0.12 0.13 0.19 0.25 0.25 0.25 0.25 0.29 0.69 0.16 0.21 0.37
Merchandise terms of trade 1.094 1.106 1.135 1.172 1.189 1.192 1.192 1.193 1.195 1.186 1.189 1.192 1.127 1.191 1.191
Current account balance ($ billions) –28.4 –49.8 –55.1 –40.8 –33.8 –44.1 –51.4 –49.7 –48.3 –49.5 –47.6 –46.2 –43.5 –44.8 –47.9
shaded area represents forecast data.
all data are seasonally adjusted at annual rates, excluding interest rates, indices, and exchange rates.
Private non-farm productivity is the average output (2002 $ 000s) per person-hour in all industries, excluding agriculture, non-commercial services, and public administration and defence.
Private non-farm average hourly earnings is the weighted average of average weekly wages and salaries in the other primary, manufacturing, construction, and services industries divided by the corresponding
average weekly hours. The weights employed are each industry’s share of total non-farm employment.
Sources: Statistics Canada; Bank of Canada; CMHC Housing Time Series Database; U.S. Bureau of economic analysis; The Conference Board of Canada.
key statistics
33
CanaDa: GRoSS DoMEStIC PRoDuCt, ExPEnDItuRE BaSED, at MaRKEt PRICES (2002 $Bn) 34
2009:1 2009:2 2009:3 2009:4 2010:1 2010:2 2010:3 2010:4 2011:1 2011:2 2011:3 2011:4 2009 2010 2011
Consumer expenditures 805.2 809.7 817.3 825.2 833.8 839.3 846.0 851.7 856.0 861.2 866.6 871.9 814.3 842.7 863.9
–0.3 0.6 0.9 1.0 1.0 0.7 0.8 0.7 0.5 0.6 0.6 0.6 0.4 3.5 2.5
key statistics
net government spending 268.4 269.3 273.7 278.2 279.4 280.4 282.3 283.9 285.4 286.9 288.4 289.9 272.4 281.5 287.7
(goods and services) 0.8 0.4 1.6 1.7 0.4 0.4 0.7 0.6 0.5 0.5 0.5 0.5 3.5 3.3 2.2
Gross fixed capital formation 280.3 274.4 280.0 284.1 291.0 296.8 303.5 308.8 311.1 311.4 312.2 314.4 279.7 300.0 312.3
–8.4 –2.1 2.0 1.5 2.4 2.0 2.3 1.8 0.7 0.1 0.2 0.7 –11.7 7.3 4.1
Government 45.3 47.5 50.8 53.5 54.1 54.7 55.6 56.5 56.6 54.8 52.5 50.5 49.3 55.2 53.6
3.1 4.9 7.0 5.1 1.2 1.1 1.8 1.5 0.3 –3.3 –4.2 –3.8 15.1 12.0 –2.9
Business 234.7 226.5 228.7 230.1 236.4 241.6 247.4 251.9 253.9 256.2 259.2 263.5 230.0 244.3 258.2
–10.4 –3.5 1.0 0.6 2.7 2.2 2.4 1.8 0.8 0.9 1.2 1.6 –16.0 6.2 5.7
Residential construction 68.6 69.6 71.1 75.4 79.2 79.4 79.2 78.4 77.5 77.0 77.2 78.0 71.2 79.0 77.4
–5.9 1.4 2.2 6.0 5.0 0.3 –0.4 –1.0 –1.1 –0.6 0.2 1.1 –8.2 11.0 –2.0
non-residential construction 66.6 61.4 59.3 57.6 57.4 57.6 59.6 61.6 62.4 63.4 64.5 65.9 61.2 59.0 64.1
–12.7 –7.7 –3.4 –3.0 –0.3 0.3 3.5 3.4 1.3 1.7 1.7 2.1 –19.5 –3.6 8.5
Machinery and equipment 99.3 95.1 99.0 96.9 99.6 106.3 111.5 115.8 118.9 121.1 123.4 125.6 97.6 108.3 122.2
–12.5 –4.2 4.1 –2.1 2.7 6.7 4.9 3.9 2.6 1.9 1.9 1.8 –20.3 11.0 12.9
final domestic demand 1,351.8 1,351.0 1,368.7 1,385.4 1,402.0 1,414.3 1,429.6 1,442.3 1,450.3 1,457.3 1,464.9 1,474.0 1,364.2 1,422.1 1,461.6
–2.0 –0.1 1.3 1.2 1.2 0.9 1.1 0.9 0.6 0.5 0.5 0.6 –1.8 4.2 2.8
Exports 423.0 405.1 414.4 428.0 439.1 445.6 444.6 451.5 458.1 465.7 472.4 478.8 417.7 445.2 468.8
–9.0 –4.2 2.3 3.3 2.6 1.5 –0.2 1.5 1.5 1.7 1.4 1.4 –14.2 6.6 5.3
Merchandise 362.2 343.5 354.6 367.6 377.4 383.1 382.2 389.0 395.6 403.1 409.7 415.9 357.0 382.9 406.1
–9.4 –5.2 3.2 3.7 2.6 1.5 –0.2 1.8 1.7 1.9 1.6 1.5 –15.3 7.3 6.0
Imports 482.6 480.3 510.2 525.3 542.6 563.6 567.7 574.8 582.0 589.8 597.1 604.2 499.6 562.2 593.3
–11.5 –0.5 6.2 3.0 3.3 3.9 0.7 1.2 1.3 1.3 1.2 1.2 –13.9 12.5 5.5
Merchandise 394.7 388.7 417.7 428.8 443.2 462.3 466.8 473.3 479.7 486.0 492.5 499.1 407.5 461.4 489.3
–12.8 –1.5 7.5 2.7 3.4 4.3 1.0 1.4 1.4 1.3 1.3 1.3 –15.2 13.2 6.1
net exports –59.6 –75.2 –95.8 –97.2 –103.5 –118.1 –123.2 –123.4 –123.9 –124.1 –124.6 –125.3 –81.9 –117.0 –124.5
final demand 1,264.0 1,248.4 1,249.8 1,265.6 1,277.4 1,278.9 1,289.4 1,301.9 1,309.8 1,317.3 1,324.9 1,333.6 1,257.0 1,286.9 1,321.4
–1.3 –1.2 0.1 1.3 0.9 0.1 0.8 1.0 0.6 0.6 0.6 0.7 –2.1 2.4 2.7
value of physical change in inventories –6.9 –1.8 –1.6 –1.2 5.5 12.7 3.5 3.4 3.3 4.8 5.2 5.6 –2.9 6.3 4.7
Government 0.0 0.0 0.0 0.0 –0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Business –6.9 –1.8 –1.6 –1.2 5.6 12.7 3.5 3.5 3.3 4.8 5.2 5.6 –2.9 6.3 4.7
Residual error –0.6 0.7 1.4 0.0 0.3 –1.0 –1.0 –1.0 –1.0 –1.0 –1.0 –1.0 0.4 –0.7 –1.0
GDP at market prices 1,287.2 1,278.0 1,280.9 1,296.4 1,314.9 1,321.4 1,324.6 1,337.4 1,345.3 1,354.2 1,362.3 1,371.5 1,285.6 1,324.6 1,358.3
–1.8 –0.7 0.2 1.2 1.4 0.5 0.2 1.0 0.6 0.7 0.6 0.7 –2.5 3.0 2
december / january 2010 / 11
shaded area represents forecast data. all data are seasonally adjusted at annual rates.
Sources: Statistics Canada; The Conference Board of Canada.
intelligence report: canada ppp key statistics 35
CEntRaL BanK RatE
%
25
20
15
10
5
0
1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009
Sources: Bank of Canada and Statistics Canada, CanSIM table 176-0043.
fEDERaL GEnERaL GovERnMEnt REvEnuE anD ExPEnDItuRES,
2008/2009
$ millions % of total
Total revenue 237,357 100.0
Income taxes 153,003 64.5
Consumption taxes 42,535 17.9
Other taxes 1,207 0.5
Contributions to social security plans 17,284 7.3
Sales of goods and services 9,588 4.0
Investment income 12,878 5.4
Other revenue from own sources 439 0.2
General purpose transfers 334 0.1
Specific purpose transfers 90 0.0
Total expenditures 236,474 100.0
General government services 9,588 4.1
Protection of persons and property 28,937 12.2
Transportation and communications 3,537 1.5
Health 26,061 11.0
Social services 71,997 30.4
Education 5,781 2.4
Resource conservation and industrial development 9,856 4.2
Environment 2,700 1.1
Recreation and culture 4,232 1.8
Labour, employment and immigration 1,714 0.7
Housing 2,220 0.9
Foreign affairs and international assistance 6,513 2.8
Regional planning and development 1,409 0.6
Research establishments 3,700 1.6
General purpose transfers 29,217 12.4
debt charges 28,982 12.3
Other expenditures 29 0.0
Surplus 883 …
… not applicable
note: as of March 31, 2009
Source: Statistics Canada, CanSIM table 385-0002
36 key statistics december / january 2010 / 11
CanaDa: PoPuLatIon
1994 2004 2009 p
Canada 29,000,663 31,940,676 33,739,859
Newfoundland and Labrador 574,466 517,447 508,925
Prince Edward Island 133,437 137,674 140,985
Nova Scotia 926,871 939,376 938,183
New Brunswick 750,185 749,369 749,468
Québec 7,192,403 7,535,929 7,828,879
Ontario 10,819,146 12,390,599 13,069,182
Manitoba 1,123,230 1,173,566 1,221,964
Saskatchewan 1,009,575 997,447 1,030,129
Alberta 2,700,606 3,239,471 3,687,662
British Columbia 3,676,075 4,155,170 4,455,207
Yukon 29,684 31,473 33,653
Northwest Territories 40,578 43,301 43,439
Nunavut 24,407 29,854 32,183
p preliminary
note: Population estimates as of July 1
Source: Statistics Canada, CanSIM table 051-0001
MaIn CoMPonEntS of PoPuLatIon GRoWtH
1988/1989 1998/1999 2008/2009 p
Births 384,035 338,295 377,703
deaths 188,408 217,632 242,863
Immigration 177,632 173,194 245,275
Emigration 40,395 48,008 42,924
p preliminary
note: all figures are for the one-year period ending June 30
Source: Statistics Canada, CanSIM table 051-0004
150 O 135O 120 O 105 O 90 O 75O 60O 45O
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P a r r
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Devon
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75 O 75O
Somerset Baffin Sea
Banks Island
Island Prince of
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Island
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Spence Bay
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UNITED STATES
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intelligence report: canada ppp key contacts 37
AlbertA PriNCe edwArd islANd
Neill McQuay, Steve MacLean
ADM, Strategic Capital Planning, Deputy Minister
Treasury Board Transportation and Infrastructure Renewal
9820 – 106 Street Government of Prince Edward Island
Edmonton, AB T5K 2J6 11 Kent St.
Tel: 780-415-1076 Charlottetown, PEI C1A 7N8
email: neill.mcquay@gov.ab.ca Tel: 902-368-5130
email: scmaclean@gov.pe.ca
british ColumbiA
Susan Tinker QuébeC
Vice President, Partnerships Services Pierre Benoit
Partnerships British Columbia Director, Projects
PO Box 9478 Stn Prov Gov’t Infrastructure Québec
Victoria, BC V8W 9W6 500, Boulevard René-Lévesque Ouest
Tel: 250-356-2382 6e étage, bureau 6.400
Fax: 250-356-2222 Montréal, QC H2Z 1W7
email: susan.tinker@partnershipsbc.ca Tel: 514-873-9026
email: pierre.benoit@infra.gouv.qc.ca
New bruNswiCk
Fred Blaney PPP CANAdA
Executive Director, Engineering John McBride
Department of Transportation Chief Executive Officer
Kings Place 100 Queen St, Suite 630
P. O. Box 6000 Ottawa ON K1P 1J9
Fredericton, NB E3B 5H1 Tel: 613-947-9480
Tel: 506-453-2849 email: john.mcbride@p3canada.ca
email: fred.blaney@gnb.ca
the CANAdiAN CouNCil for
NovA sCotiA PubliC-PrivAte PArtNershiPs
Jane Fraser Cynthia Robertson
Executive Director Executive Director
Strategic Capital and Infrastructure Planning 1 First Canadian Place
Department of Transportation and 100 King Street West
Infrastructure Renewal Suite 1600
P.O. Box 186 Toronto, Ontario, M5X 1G5
Halifax, Nova Scotia B3J 2N2 Tel: 416-861-9917
Tel: 902-722-1411 email: crobertson@pppcouncil.ca
email: fraserjc@gov.ns.ca
oNtArio
Vas Georgiou
Senior Vice President
Project Delivery
9th Floor, 777 Bay Street
Toronto, Ontario
M5G 2C8
Tel: 416 212-7289
email:vas.georgiou@infrastructureontario.ca
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December / Janaury 2010 / 11 • www.infrastructureinvestor.com