No holding back

Different countries offer different responses to financial pressures. In Portugal, as we relate elsewhere in this issue in our Iberia report, public-private partnerships (PPPs) are seen as having helped to create the mess that country now finds itself in – as a result of which, the plug has been pulled on future PPPs and the government is even examining how it might claw back money from existing ones.

In Canada, by contrast, PPPs are being seen as a major part of the solution to the difficulties of funding much-needed infrastructure when budgets at the national, regional and local level are under severe pressure. As we note in our country report on Canada, embrace of the PPP has spread to the provincial and municipal levels. But the love affair with PPPs started at the federal level, with the launch of the $1.25 billion PPP Canada Fund having been a major driving force.

Best practices

PPP Canada was created in 2008 by the country’s Ministry of Finance, headed by James (“Jim”)Flaherty. It was the country’s first federal-level organisation dedicated to promoting PPP projects and best practices nationwide. 

In the Canada Intelligence Report  published earlier this year by Infrastructure Investor, Flaherty described the rationale for the organisation thus: “PPP Canada was created to help protect taxpayers from future costs, encourage good project management, increase the pool of capital available for infrastructure, help expand the market for PPPs in Canada, and offer new investment opportunities for domestic investors such as pension funds.”

One of PPP Canada’s shining achievements was the successful launch in 2009 of the $1.2 billion PPP Canada Fund, which is expected to ultimately leverage $5 billion of PPP investments in Canada. Headed by chief executive John McBride, the Fund has since backed a host of infrastructure projects including a wastewater treatment facility in Alberta, a train maintenance centre in Quebec and a road extension in Manitoba.

Earlier this year, PPP Canada opened the third round of applications for the Fund. From the second round of applications, which closed in 2010, PPP Canada received 68 proposals across 11 provinces and territories. PPP Canada has previously said it expects to commit $300 million to projects by the end of 2011. 

PPP Canada and its eponymous fund have helped to create the foundations for the future development of Canada’s infrastructure. But the award is not in recognition of landmarks already achieved. Rather, it is in recognition of the optimism with which Canada continues to embrace the PPP model against economic pressures that have forced reassessments of the model all over the world.

Moreover, where other countries – such as the UK, for example – are putting the emphasis on economic infrastructure such as high-speed rail, Canada continues to prioritise projects in a range of different sectors, social as well as economic.

This wholehearted embrace of the PPP was encapsulated in the March 2011 federal budget put forward by Flaherty. As part of a push to establish Canada as a leader in PPPs, it was announced that, henceforth, all projects creating an asset with a lifespan of at least 20 years and having capital costs of $100 million or more will be required to evaluate the potential for using PPPs – a so-called “P3 screen”. If it’s determined there is the potential for a PPP, then a PPP proposal has to be developed among the possible procurement options.

Furthermore, the budget also encouraged government departments to consider the potential of PPP approaches for other types of projects and procurement of services.

New framework

Another step forward was the issue of a Request for Proposals (RFP) in early August for the creation of a PPP procurement framework. This is because, in PPP Canada’s words, “to date, the federal government has not established a framework or procurement processes specific to P3 projects”. The framework is expected to be formed from the analysis of recent PPP procurement processes to formulate guidelines for future transactions. The expiry of the RFP was imminent at the time of going to press.

Behind the scenes, a number of individuals have played a key part in the Canada PPP story. We know because, in our Canada Intelligence Report, we spoke to many of them. To mention just a few: the aforementioned John McBride; Partnerships BC’s Sarah Clark; Alberta Infrastructure’s Ray Danyluk; Infrastructure Ontario’s Vas Georgiou; and Infrastructure Quebec’s Normand Bergeron. The list could be much bigger.

But our award is in recognition of the efforts of government ministers and, for that reason, it’s Flaherty who follows in the footsteps of our two previous winners: India’s then roads minister Kamal Nath in 2009 and, last year, Mexico’s President Felipe Calderón.

Honourable mentions:
José Blanco, Spanish Transport Minister
Philip Hammond, UK Transport Minister
Vo Hong Phuc, Vietnam Minister of Planning and Investment 
Cesar Purisima, Phillippines Finance Secretary
Nicolas Sarkozy, French President