Ontario province ‘to own’ highway 407 extension

The government will have far greater control and involvement over the eastward extension of the toll road than the privately-operated section of the highway known as the 407 ETR.

The Canadian Province of Ontario will issue a request for proposals later this year to build, design and maintain a 50 kilometre eastward extension of its highway 407 but will retain control and ownership of the extension.

The extension will adjoin a 110 kilometre section of the 407 known as the 407 ETR. The 407 ETR is a privately-operated toll road which runs across the greater Toronto area north of the City of Toronto. It was leased to a consortium comprising Grupo Ferrovial/Cintra (61.3 percent), SNC Lavalin (22.6 percent) and CDP Capital (16.1 percent) in 1999 for C$3.1 billion.

That transaction was completed when the Ontario Conservative Party was in power. Today, the province is controlled by the Ontario Liberal Party, which views toll road privatisations with greater skepticism than the Conservatives.

The province said in a statement that it “has learned important lessons over more than a decade of tolled highway driving in Ontario”. The province believes it must retain public ownership of highways, that the length of any operating contracts must be significantly less than 99 years, that toll rates must be regulated by the province and that customer service expectations and complaint resolutions must be set out from the outset.

The province does not have the power to set and regulate the tolls on the 407 ETR.

The Ontario Ministry of Transport will still seek a private sector partner to construct the extension. Construction will begin once environmental approvals are obtained, with service beginning by 2013.

Today, the 407 ETR is 53.2 percent owned by Cintra, 30 percent by the Macquarie Infrastructure Group and 16.8 percent by SNC Lavalin. It averaged about 375,000 daily trips in 2007.