A Can-do attitude
PPP Canada launched its updated five-year corporate plan last month, outlining how it will assist in the promotion of PPP projects in Canadian provinces with markets still at the early stages of development. The Corporation will invest $1.2bn at both state and federal level over this five year period.
On the back of the publication of PPP Canada's Corporate Plan, how would you personally rate progress over the last 12 months of operation?
The P3 Canada Fund was generating interest, not as a supplement to municipal and provincial infrastructure funds, but as a means by which jurisdictions could leverage greater value for taxpayers' dollars. We have announced our first two projects, the first is a connectivity and broadband project in the Maritimes, and the second is a local road project in Winnipeg, Manitoba. We expect to announce further projects in the coming months.
PPP Canada has supported two federal P3 projects coming to the marketplace to date: the Communications Security Establishment of Canada's (CSEC) Long-Term Accommodation project and the RCMP 'E' division headquarters.
Both of these projects have been strong indicators of the need for new innovative approaches to infrastructure delivery. The road ahead looks very promising.
What response has PPP Canada so far received to the second round of the P3 Canada Fund?
We had an overwhelming response to the second round call for projects. We received 73 projects applications, more than three times the number we received in Round One. Project proposals were received from all provinces except two. For the first time, projects were received from Newfoundland and Labrador, Nunavut and Ontario and we saw a marked increase in interest from municipalities and First Nation communities.
Projects varied in scope and by sector – an import measure of the development of P3s as a procurement tool for governments.
In the plan, you mention that 'value for money' and the integrity of the 'procurement process' are both vital for increasing industry and public perception of PPP as a finance mechanism. What previous projects would you hold up as demonstrating best practice on both these requirements?
Take the CSEC Long-Term Accommodation project, for example. PPP Canada provided P3 advice to CSEC on the execution of the project. The advice provided by PPP Canada was to restructure the project to include a $300m payment at substantial completion of the construction phase, in order to reduce the long-term financing requirements of the project. This payment generated direct interest savings in the order of $150m to the taxpayer.
In my view, the P3 structure and procurement of this project are sound and follow best practice. This project will not only be a benchmark measure for PPP Canada's work in delivering P3 advice to federal departments but also a win for Canadian taxpayers.
What sectors are emerging in Canada and what actions are planned to develop and foster these new areas during 2011/12? Furthermore, is PPP Canada planning to prioritise any of the three marketplaces (advanced, emerging and undeveloped) it highlights in the report?
To date, PPPs in Canada have primarily been concentrated in the health sector, schools, correctional and police facilities, highways, local roads and bridges. That pipeline continues to grow as jurisdictions are aligning their infrastructure funding priorities with the needs of Canadian communities. As the market expands, we are beginning to see interest in the renewable energy sector, rapid transit, and water and wastewater management.
PPP Canada outlines an increasing project rate between 2010 and 2013. Two new projects are outlined in this financial year, increasing to 20 by 2012/13. This seems like a large rise – how achievable would you say this target is?
I'm confident this is a manageable target. Ambitious, perhaps, but manageable. As a corporation, we feel it is necessary to set targets in order to measure and manage our success.
It is important to be realistic in our expectations of the fund. Our incremental approach to setting project rate targets from one year to the next reflects our perception of the readiness of public authorities to consider P3 procurement and commit the necessary resources to implement it as a procurement solution.
What can be done to continue Canada's position as a strong environment for foreign investment and how will PPP Canada help facilitate this?
With its solid credit ratings, low exchange risk and reliable legislative frameworks, Canada is a top international market for P3s. PPP Canada is working across all levels of government to streamline P3 processes and support an attractive climate for investment.
Although it's some way in the future, how would you want to see the market at the end of the period covered in the corporate plan?
We mention in our corporate plan that in spite of the early stages of P3 procurement adoption in Canada, we are still seeing a large degree of variability amongst P3 markets. Some are more active, with greater experience and capacity, while others are only beginning to get a taste of the value P3 procurement can offer.
Certainly, at PPP Canada our goal is to leverage better P3s through investments of the P3 Canada Fund. Already, the fund is demonstrating the capability to leverage more interest in P3 procurement across Canada. Success will take the form of a multiplication of the Canadian jurisdictions which consider P3 procurement, and a diversification of infrastructure classes which are procured as P3s.
We are aiming for a steady pipeline of good quality P3 infrastructure projects across the country for private sector partners to bid on. As a measure of our success, we hope to see a larger number of P3s, with various degrees of scope, as well as jurisdictional and sectoral diversity.
In addition, we hope to see a more regular consideration of the P3 procurement option at the federal government level, where large, complex projects are concerned. Federal departments have already begun to identify projects that could be well suited for P3 procurement.
At the end of 2015, we hope our work will have increased the number of governments across Canada that consider P3s an intrinsic part of their infrastructure policy frameworks.
Interview conducted by John Mills, reporter, PPP Bulletin.