The bundling of infrastructure assets holds “untapped potential in Canada to get more infrastructure built”, according to a joint report from Standard & Poor’s and the Canadian Council for Public-Private Partnerships.
The report, published last week, came eight months after a roundtable was held by the two groups to bring public and private sector representatives together. Participants at that event concluded that “jurisdictions in Canada do not fully recognise the opportunity that P3 bundling can bring to improving infrastructure in this country”, the report said.
Canadian municipalities have used PPP bundling for several projects in recent years. A series of PPPs to build 40 schools in Alberta was completed between 2010 and 2014, with the three-phase project totalling C$1.18 billion ($940 million; €800 million).
Similar approaches were taken on a C$635 million Saskatchewan PPP, through which 18 schools were built; and with the Ontario Provincial Police facilities project, which involved the construction of 18 detachments, regional headquarters and forensic identification services.
“P3 project bundling presents an opportunity to get more infrastructure built quicker, on budget, and with efficient risk transfer,” the report said.
Bundling could also help attract more institutional equity into PPPs. At our Canadian roundtable, held in May, Andrew Claerhout, head of infrastructure and natural resources at the Ontario Teachers’ Pension Plan, said the Canadian PPP market has not been very attractive for institutions. “It’s great for lenders and construction companies, but not particularly great for people looking to write large equity cheques,” he explained.
While bundling of PPPs has been used more often in Canada than the US, participants at the February forum felt it remained an underutilised tool, according to CCPPP director Steven Hobbs. One key to unlocking their potential, Hobbs said, is improving co-ordination between the federal and provincial governments and local municipalities.
“You are seeing governments trying to wrap their heads around it and trying to do more projects,” Hobbs told Infrastructure Investor. “I wouldn't say that by any means there is a co-ordinated bundling programme yet.”