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Waterloo endorses $822m rapid transit PPP

The Canadian region has approved a design, build, finance, operate and maintain contract for the delivery of light rail and bus systems.

In the Waterloo region, situated in southern Ontario, Canada, the regional council has green lighted the use of a design, build, finance, operate and maintain (DBFOM) model for a rapid transit system. 

The first phase of the project, which involves light rail and bus systems, is worth C$818 million (€619 million; $822 million) and has been approved as a public-private partnership (PPP). Several procurement options were under review, but on a council meeting held on Wednesday members approved the use of a DBFOM structure.

The major concerns stemming from Waterloo staff as well as constituents regarding a PPP were a loss of control of the rapid transit system in addition to a lack of clarity on the cost savings. Council members addressed those issues in part with the inclusion of a short-term operations contract that will be revisited after five or 10 years.

The finance and maintenance components of the contract are for a 30-year duration. Council members also pointed to the long-term benefit of partnering with the private sector versus the initial upfront payment due participants.

The initial phase of the rapid transit system involves the construction of 19-kilometres of light rail transit and 17-kilometres of an adapted bus rapid transit system. Of the total cost, the provincial government of Ontario has earmarked C$300 million while the Canadian government has committed up to C$265 million. The region’s responsibility is some C$253 million.

“As part of the DBFOM procurement and delivery of the project, the region will withhold part of the construction payment to the private company and pay it in instalments when the contract requirements (including availability and performance requirements) are met by the private company over the project term,” Nancy Button, acting director of Waterloo’s rapid transit team, told Infrastructure Investor.