PPP projects in the north
November 24, 2012
Public Private Partnership projects are attractive to governments as they allow projects to be built quicker and with less financial commitment up front. PPP projects are becoming more popular.
Governments at all levels have been increasingly relying on P3s to reduce public risk, speed up construction timelines, improve efficiencies and give private enterprise an opportunity to innovate on major infrastructure projects like bridges, roads, hospitals and schools. Basically, the public entity (usually the government agent) and the private entity negotiate a long term agreement under which the private entity will build the asset and the public will pay over a long period of time but will ultimately own the asset. Project delivery methods differ on the level of responsibility a private entity is given. Typically, a project delivery method that transfers more responsibility onto the private entity also transfers more financial risk. PPPs such as build-own-operate and build-operate-transer are no exception. While these project delivery methods allow the private sector more responsibility in financing, designing, building and operating the project these methods also assign more financial risk to the private sector.
Some examples of PPP projects in the north are:
- A $77M project build improvements at the Iqaluit International Airport. The project includes a new airport building; expanded aprons for planes to park; new lighting systems; an upgraded runway; and a new combined services building that will house the fire-fighting vehicles, support equipment and the heavy equipment that maintain the runways. A private partner will be chosen by the Government of Nunavut through a competitive selection process to design, build, finance, operate and maintaining the publicly owned airport for a total concession period of 30 years. This project is still underway. The Government of Nunavut also recently completed some building construction using the PPP model.
- The $750 M Forrest Kerr project in northern BC. Forrest Kerr is a 195 MW run-of-river hydroelectric project. The project will capture the immense energy produced by the natural flow and elevation drop of the Iskut River to produce and deliver clean, renewable power to the grid at Bob Quinn Lake via BC Hydro’s proposed 287-kV Northwest Transmission Line (NTL). The government party in this case is BC Hydro, the buyer of the power output. The proponent is Alta Gas. The project is underway now with completion expected by 2016. Alta Gas has two other projects in northwestern BC in the planning stages.
- Alaskans have been debating the ~$1 B Knik Arm bridge project for a number of years. In fact $75 M has been spent on the studies relating to the bridge but construction has yet to begin. The bridge, if built, would be 2.7 miles long and would cross the Knik Arm connecting Anchorage with Point MacKenzie on the the Mat-Su peninsula. The Knik Arm Bridge and Toll Authority (KABATA), was created on September 15, 2003 by the State of Alaska to construct a bridge across Knik Arm. KABATA has received preliminary planning funds through Congressional appropriation. Future project funds are anticipated through federal, state and local grants, and public and private sector investment. As a public corporation, KABATA is empowered by the state to sell revenue bonds and establish user fees to fund and operate the project.
Tight public finances and successful PPP experiences will increase interest in public-private partnerships.
- b) Matti Siemiatycki, an assistant professor of Geography and Planning at the University of Toronto has an excellent site that provides an overview of PPP projects. See http://individual.utoronto.ca/siemiatycki/PPP%20Introduction.html
- e)http://knikbridgefacts.org/ and http://www.knikarmbridge.com/